HOUSING Country dwellers move into second-home-in-the-city trend

Increasing investments and entertainment are just a few reasons for the trend.
KNIGHT RIDDER NEWSPAPERS
PHILADELPHIA -- The idea of country folk owning second houses in the city is not a new one. George Washington owned a townhouse in Alexandria, Va., where he and Martha stayed whenever they came to town from Mount Vernon on business.
The estate and Alexandria were only eight miles apart. But in the days of horses and bumpy carriages, and muddy, rutted roads in the darkness, it might as well have been 200.
When transportation improvements such as the railroad encouraged longer commutes and sent well-to-do Americans scurrying to the mountains and beaches in the summer, second homes evolved into vacation homes. Post-World War II suburbanization and the growing amount of leisure time for all classes accelerated the trend.
Changing culture
What goes around comes around, however, and the second-home-in-the-city thing appears to be catching on again.
Why?
One reason is the rebirth of cities in the 1990s as 24/7 cultural and entertainment centers. A second is the reemergence of the investor as a player in the residential real estate market.
Recent data from the National Association of Realtors show that 66 percent of people who bought second homes in the first quarter of 2003 bought them in cities.
"The concentration of second-home purchases in metropolitan areas during the first quarter is the reverse of what we see on an annual basis, where most are purchased in resort, recreation or rural areas," said David Lereah, the NAR's chief economist.
The bump-up might be related to this year's harsh winter.
"There appears to be a seasonal trend in the location of second-home purchases, with winter favoring investment properties in metropolitan areas," Lereah said.
Buyers generally have shown a greater interest in investment properties over the last few years, he said.
Investments
An NAR study of second-home owners, published in November, showed that 78 percent of all second homes were used primarily for recreational use.
But a separate examination of recent buyers shows that the percentage purchasing second homes as an investment rose from 20 percent in 1999 to 37 percent in 2002.
Walter Moloney, an NAR spokesman, said the statistical breakdown did not focus on specific metropolitan areas, but on regions of the country.
"We found the greatest concentration of urban-area second-home purchases in the Northeast," he said. "The largest percentage of those purchases were for investments, and only 1 percent for vacation purposes."
Bari Shor, who sells houses in Philadelphia for Prudential Fox & amp; Roach, has represented several clients who fit the category.
"It's funny, but I didn't consider that it might be a trend until I heard about the survey," Shor said.
Rather than being a move by affluent folks eager to invest in real estate instead of the stock market, she believes that the second-home buyers are "people who want to live here because they are spending more and more time here."
Complex reasoning
An interesting observation on the trend -- if, indeed, it is a trend -- came from members of her book club, Shor said: "They said that buying a second house in the city is a way of easing husbands out of the suburbs."
"The children are grown, the house is too big, but husbands still feel comfortable surrounded by lawn," Shor said. "By owning a pied-a-terre, the women can drag their husbands to cultural events, restaurants, and other downtown amenities."
Ah, but the reasons for second-home purchases may be more complex.
Derrick Van Eck was living in northern Hunterdon County, N.J., and working in Princeton, N.J. Originally from Manhattan, he found himself "in the middle of nowhere," missing the amenities of big-city life.
He had considered a second house in Manhattan, but chose Philadelphia instead.
"The commute from Princeton to New York City is a lot more difficult than driving from Princeton to Philadelphia," he said. In addition, "while Philadelphia has the allure of a big city, living here is less stressful than living in New York, he said.
Van Eck grew to like Philadelphia so much that he sold his house in central New Jersey and lives here permanently now, while continuing the daily commute to Princeton.
He has a vacation place in Rhode Island, where he spends most weekends.
Baby boomers
It may be that Van Eck's experience is the rule rather than the exception here. As Shor's book-club comrades suggest, buying a second house in Philadelphia may be just a prelude to living here full-time.
In the absence of local statistics, realtor Allan Domb, does not believe that having a secondary residence in the city is a trend in Philadelphia.
"There is something, however, that makes this market unique, and that's a growing percentage of affluent people who own houses in Philadelphia, at the Shore and in Florida," he said.
This group is made up primarily of aging baby boomers who sold larger houses in the suburbs and used the proceeds, and low interest rates, to buy multiple houses.
Geography helps, Domb said, because it is a relatively easy commute from downtown Philadelphia to the New Jersey Shore.
Owning vs. renting
Though Domb, who has dominated the high-rise condo market since the 1980s, does not think urban second-home purchases are as common here as in cities such as New York, Chicago, Washington and Boston, he does understand the motive.
Domb agrees with the NAR's Lereah that there is an increase in city-living during harsh winters, as well as when gasoline is in short supply or per-gallon prices are high.
Why not rent a place?
Domb, who owns many condos as investments, said the downtown rental market had been weak over the last two years. Fixed interest rates, though rising, remain below 6.5 percent, and a lot of potential renters realize they can do much better financially buying houses instead.
In addition, office-building conversions and construction have brought 3,000 to 4,000 more apartments to Philadelphia, further diluting the rental market.
Recent statistics from the NAR show the occupancy rate in the multifamily market in the Philadelphia area to be below the average of 54 metropolitan areas surveyed. The NAR's 24-month projection shows that the occupancy rate will remain below average.