It may be the best time in more than a decade to buy a country house.
While some homebuyers are waiting for Manhattan real estate prices to decline, others are finding deals in the exclusive second-home markets outside New York City. In Litchfield County, the North Fork of Long Island, and Dutchess and Columbia counties in upstate New York, which have been more affected by the national housing slump than New York City, listing prices are falling while inventory is increasing. As mortgage rates begin to creep higher, the best time to buy is in sleepy August, brokers say, before an uptick in activity expected this fall.
"It's a great time to buy because I really think we've hit the bottom out here," a managing director for the North Fork of Long Island at Brown Harris Stevens, Suzanne Hahn, said. "Cyclically, 2008 is probably the best time to buy since the mid-1990s."
Despite slowing sales, home prices in Manhattan have stayed strong in recent months, buoyed by lucrative sales of high-end properties and an influx of foreign buyers. In the second quarter of 2008, the median sales price of a Manhattan apartment exceeded $1 million for the first time in history, reaching $1.025 million, a 14.5% increase from the prior-year quarter, according to the appraisal firm Miller Samuel.
But areas outside New York, where wealthy city-dwellers flock on weekends ó beaches in the Hamptons, vineyards on the North Fork, horse farms in northern Dutchess County ó are not as resilient. For the Hamptons and North Fork of Long Island, for example, new figures released this week show the median sales price dropped 9.2% to $817,500 compared with the same period last year, while the total number of transactions declined 13% to 541, according to Prudential Douglas Elliman's second-quarter report.
While these areas attract many of the same wealthy buyers as Manhattan does, and tend to hold their value long-term, their markets have softened because "no one needs to buy a secondary home," a vice president and executive director for eastern Long Island at Brown Harris Stevens, Charles Manger, said. As a result, "there's increases in inventory, a decrease in the listing prices. Is this a good time to buy? Of course."
Price decreases have been especially steep in second-home markets outside the Hamptons, which have received little attention from the foreign buyers who are snapping up Manhattan apartments. In northern Dutchess County, where wealthy New Yorkers flock for horseback riding and fox hunting, the average sale price for the first half of this year for homes over a million dollars was $1.486 million, down from $2.05 million for the same period in 2007, a broker at Millbrook-based H.W. Guernsey Realtors, Candace Anderson, said.
Dutchess and Columbia counties have attracted a few foreign buyers, but "not too many, because it's outside the mainstream of New York," the principal broker at the Chatham-based real estate firm Schoenfeld French & Lull, Maria Lull, said.
In rural Litchfield County, where rolling hills and antique shops lure weekending New Yorkers, sales fell 22.4%, to 142, in May compared with the same time last year, and prices dropped 17.2%, to $250,000, according to the Warren Group, which tracks New England real estate trends.
While the Northeast hasn't seen fire-sale prices like in Florida or California, "you can get a better price than you would have a year ago," a broker at the Sotheby's office in Kent, Conn., Ira Goldspiel, said.
While such news is a bitter pill for sellers, it's good news for well-qualified buyers. "You can actually negotiate," he said. "You're not seeing as many bidding wars. If there's something wrong with a property, you can get it fixed."
Stephen Kilroy, who bought a historic three-bedroom cottage in West Cornwall, Litchfield County, earlier this month, said that when he was looking for properties last summer, he was frustrated by the frenzied pace of the market. "We felt like we were being used as bait" by brokers, he said. "There was a lot of action on those listings."
This time around, "it went very smoothly," he said. Mr. Kilroy, who is an attorney, added that he purchased his 5.5-acre property for $100,000 less than what he offered for homes in the area last summer. He also had no problem getting a mortgage. "It was quick," he said. "Mortgage rates were pretty decent." Indeed, he secured a rate that is approximately one point lower than what he pays for the mortgage on his Brooklyn Heights brownstone apartment, which he bought in 2006.
Wealthy buyers with good credit now are able to get low mortgage rates, after the Federal Reserve cut interest rates this winter, Mr. Manger said. But that won't be the case for long. "Mortgage rates are starting to tick up," he said. "They're not going to stay low. That window is starting to close."
Now is also a good time to buy because August is historically slow for real estate, with many potential buyers taking vacations, Ms. Anderson said. This fall, the market is expected to pick up. "I can always tell what kind of season we're going to have by the second week in September," she said. "Now is a very good time to buy."