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“Guys on Wall Street would sell the Hamptons house and their art collection before they would take their kids out of a top school,” says one Morgan Stanley banker. “Education is an essential.” The top end of the art market has recovered quickly from the recession, so selling now might not be a bad move.
Funny thing is, I see business picking up in the Hamptons ( albeit, from a horrendous Q4 2011) and am hearing about an uptick in NYC sales too.
So what’s the truth here? Unfortunately, with no dependable date sharing and tracking system in The Hamptons, we can’t know…stay tuned!
A while back, Doug Heddings posted about the
Among his points was the point that some agents still, in this new reality, win listing by giving “flattering” prices to the sellers, just to get the listing.
When you know someone else will do it, then why not? After all “Hamptons L:ightening” could strike and someone just might pay more than it worth.
And it will bring buyers who are looking in that price range that you can show other homes to, so the practice is hard to resist for many.
But this is an extreme:
I know these agents and they are all good at what they do…must’ve been a very obstinate seller ;-)
It’s not unusual for homeowners to add or rent out a room from time to time, but there are rules about this sort of thing, you know…
Southampton Town Code Enforcement chief says the estate was operating as a transitional rental without a permit.
- By Brendan J. O’Reilly
- February 6, 2012
Southampton Town Code Enforcement executed a search warrant Sunday at a Water Mill estate advertised as “The Ultimate Luxury Rental in the Hamptons.”
The owner and builder, Michael D’Alessio, and two others, Matthew Ardley and Megan Kemper, were issued appearance tickets for alleged code violations, including change of use, construction without a permit, operating a transitional rental and not having a rental permit, according to Chief Investigator David Betts. see more here
Gregg Saunders, vice president of retail real estate development at Philips International, had been in no rush to sell a house north of Route 27 in Sagaponack that was built for him and his wife in 1998. The four-bedroom property with a tennis court and pool had been on the market for two years at $2.9 million.
Then last year, he bought a historic home on an acre of land closer to the beach in the same town for $2.45 million.
Saunders said he “didn’t want to be stuck with two homes,” so he cut the price on the first house “dramatically.” It sold in December for $1.75 million.
as told to Bloomberg News, Jan26, 2012
The reality is, the realty market in Manhattan has held significantly better than The Hamptons. We have typically said that “as goes New York, so goes the East End”, however it does not appear to be holding true this time around.
January 27, 2012, 8:14 AM EST, Bloomberg
Why would that be? Could it be:
1- Manhattan has more permanent residences and The Hamptons are more discretionary homes?
2- There are more foreign buyers in Manhattan than The Hamptons because the investment quality of Manhattan real estate is more stable?
3- The Bankers who have fueled both buying here as well as the business of others who end up buying here are being more conservative? ( have you heard the stories about the senior management at Goldman, Chase, etc telling their ranks to “keep a low profile”)
4- Is it that The Hamptons don’t have professional property management companies that can manage real estate investments adequately for investors?
5- When enough properties sell for 60% (or less) of asking price, does that spook big buyers to downsize and play it safe?
6- Could the lack of dependable Market Data make today’s more educated buyers uneasy?
I suppose we’ve been spoiled.
“Oh,$25million was the highest sale last year? Too bad.” Well, while most of us would love to have those $25m, $24 and even the $16M sales, seeing them at the top of the carts, compared to the $100M Further Lane and $65M Gin Lane sales of 06-07 make us ponder if this low-carb life style is here to stay?
We shall see, wont we?
…to be continued.
“Compared to the third quarter of 2010, home sales in the Hamptons and North Fork jumped 14.7 percent, to 538 from 469, and the median price rose 12 percent, to $700,000 from $625,000″
East End market gains over last year
Third quarter marks second highest number of $5M-plus sales in four years
October 27, 2011 12:00AM
By Leigh Kamping-Carder, The Real Deal Magazine
Just for the record, I have an issue with flowery articles that put a positive spin on data reports that show slight gains after a catastrophic downturn. And to top it off, because there is no single source for home sales on the East End ( because the brokers are still refusing to employ an MLS system in order to keep out competition) every report has different data and is interpreted differently. The report below shows a decline in Q3 2011 vs Q3 2010…who’s right?
Yes, sales are increasing in some areas and in the higher price ranges, but there are still thousands of homeowners who are under water, stuck in their homes, unable to sell and don’t know where to turn or what to do.
Any improvement is good, but let’s be realistic about where we’ve been and where we are.
Here’s a table of 3rd Quarter sales on the East End from 2007 to 2011.
This is a market where every other resident has their real estate license (in hopes of fortune and fame) and many of people we know bought multiple properties in the “Roaring 00′s
when the number of sales are down nearly 40% from 2007 and the sales volume is down nearly one-half billion dollars, that’s not great news.
|East End 3Q 2011||454||573,840,437||607,250|
|East End 3Q 2010||549||627,850,081||602,999|
|East End 3Q 2009||535||652,774,790||590,000|
|East End 3Q 2008||517||601,573,787||575,000|
|East End 3Q 2007||725||1,051,874,697||732,000|
It comes down to business levels and greed. Flat out, the owners would rather have their shops empty than rent them for a price year round tenants are willing to pay.
There is a moral component to that, and not being a landlord, perhaps I can’t appreciate that situation. But being a resident and a Realtor, I can appreciate that fact that it is depressing to see empty stores on our Main Street.
Here’s an article from the NYTimes, which only skims the surface:
Charles DiSapio, the owner of Country Gear, a home furnishings store in Bridgehampton, said if he had not bought the building where he opened the business in 1982, he would not have been able to keep up with rising rents.
“I couldn’t afford to be here,” he said. “I’ve seen a lot of stores go out of business because they didn’t own their building.”
One of the things that keeps values down in Springs is the high taxes and now they are getting thumped again…they just can’t win.
Shouldn’t the Board of Ed try to figure out how to level the taxes between the districts that share the same resources?
A Surprise Tax Increase For Springs
District influx of 37 high school students
By Kate Maier, The East Hampton Star
(October 21, 2010) The 2010-11 Springs School District tax increase has jumped from 5.1 to 9.5 percent as a result of an unanticipated influx of 37 high school students, which amounts to an additional tuition payment of more than $800,000 to the East Hampton School District.
The Springs School District’s attorneys have advised that the tax levy increase is not subject to a public vote because it is tuition related, said Christopher Kelley, the Springs School Board president, at a meeting on Monday night. rest of story here
Many have been trying to put on the best face possible about Hamptons Real Estate for the past couple of years;
“Oh, it’s a little slow, but it will come back” or ” I’m busy, aren’t you?”…yeah, right.
Sure, a handful of agents have done well to ok during this economic downturn and, if getting listings is a measure of success, then some are doing great! But if selling those listings is important (and isn’t it?), then very few are thriving.
Sales are down +50% from the peak and values are down 25-33%, and even as much as 50% on some properties that happened to get caught up in the frenzy of “The Roaring 00″s”. Just recently, B of A sent a value statement from an off site appraisal company to a homeowner stating their property in Sag Harbor was valued at $660,000. In November of 2006, that same property was appraised for $1,200,000. How do I know? That homeowner is me.
The realities of The New Reality are staggering. Many are still in denial about the value of their property. On Long Island as a whole, it appears that about 25% – 1 in 4 – of the listings are priced within 10% of fair market value, which is the same price it was valued at in 2004. In the Hamptons, that figure appears to be even less. The rest of the properties just sit and get stale. many of them don’t even get shown because the asking price is so far off the market value no one wants to see it.
The Ebb & Flow of Hamptons Real Estate
Many of those who had been standing on the sidelines with cash to take advantage of the reduction in values did just that in The Hamptons in late 2009-early 2010 ( flow), but once word got out that sales were brisk, sellers got emboldened and started raising their prices or put their houses on the market for ridiculous prices and buyers backed off (ebb). The uncertainty around the economy and the upcoming elections all contribute to the stalemate and the ebb.
Conventional wisdom would say that once the elections are over and there is a clearer picture of what the make-up of the congress will be, that confidence will start to come back and sales should pick up. Also, word has it that Wall Street Bonuses will be healthy for 2010 and, as they start rolling out in these next few months, that should contribute to brisker sales in Manhattan and The Hamptons as well. That being said, while money is no object to some, many don’t want to be in the position of reaching for a falling knife.
My belief is that Hamptons Real Estate will maintain +or- 5% of 2004 values for the remainder of 2010 & 11, and that we are in for a similar market as the 1990′s when values pretty much held for much of the decade until the banking industry woes worked out and economic and demographic forces came together to create The Roaring 00′s.
That’s not from my crystal ball, that’s from my head and my gut. I threw out my crystal ball in 2008 after it cost me pretty much all I had. Onward and upward…
Some recent articles about The New Reality:
|Hamptons Home Prices Fall as Buyers Seek Budget Retreats: Video
Oct. 21 (Bloomberg) — Home prices in New York’s Hamptons, the beachside resort towns in Long Island swelled by summering Manhattanites, dropped 14 percent …
The Hamptons Home Sales Down 19% Quarter-over Quarter in Q-3
‘Affordable’ Sales Dominate Hamptons Real Estate
|Hamptons Go South
Wall Street Journal
By SHELLY BANJO Even though Hamptons publisher Richard Ekstract dropped the price of his eight-bedroom Bridgehampton mansion to $7.99 million from its …
|Hamptons Home Prices Fall as Buyers Seek Lower-Priced Retreats
By Oshrat Carmiel – Thu Oct 21 04:00:01 GMT 2010 A for sale sign hangs in front of a property inEast Hampton, New York. Photographer: Jin Lee/Bloomberg …
I first spoke with Oshrat about this piece in April. Since then numerous articles about how “The Hamptons Are Back” have surfaced because sales are up from the dismal 2009 levels.
Keep in mind that sales, in 2009, were down a whopping 75% from 2007 levels, which was the peak of the market coming out of a strong 2006 and sweeping into 2008, despite the first “credit bubble” of fall 2007. So, doubling of 2009 sales still leaves us with sales down 50% from the peak, a steep grade to climb.
I see real estate during this upcoming decade (the 10′s) as being much like the 90′s, where there will be ups and downs, but little meaningful appreciation. There is little to drive enthusiasm and still lots and lots of underwater inventory and “a new reality” that will drag on many for years to come.
Another thing to consider is that, while the median and average sales prices are up, down and all around, while they are appearing to resemble times past, what is different is the homes that represent those figures. Homes that would have sold for $5,000,000 in 2007 are selling for $3,500,000 today. Sure there are exceptions, but that is the rule.
So numbers don’t lie, but those who interpolate them sometimes do…md
By Oshrat Carmiel – Aug 10, 2010 3:18 PM ET
Now’s the time to buy a beachfront home in New York’s wealthy enclave, where prices are down and inventory is up.
George Ross, an energy analyst at First Eagle Investment Management LLC in New York, made a deal in the Hamptons that would have been impossible just a few years ago. He bought a waterfront cottage for less than $1 million.
Ross, a triathlete who swam three-quarters of a mile (1.2 kilometers) around the Statue of Liberty in June, had a vision for the perfect vacation home in the Hamptons, the New York retreat where celebrities mingle with financiers. It had to have what he calls swim-ability. “I go out of my house without crossing the street and go swimming–and I don’t mean in some goofy creek,” Ross, 41, says. “I come out of the water, back on my own property, take an outdoor shower. To me, that sounds pretty great.”
So does the price that the analyst paid for his small but well- maintained wooden cottage in Westhampton Beach. The 640-square- foot (60-square-meter) house sits on a thin coastal strip, with the Atlantic Ocean on one side and Moriches Bay 50 feet (15 meters) away on the other. In February, Ross made an aggressive $830,000 bid for the house, which was listed at $889,000, before settling on $875,000. Three years earlier, the two-bedroom with a wraparound deck sold for $1.24 million.
Buyers have been snapping up vacation homes valued at about $1 million in the Hamptons. As of the second quarter, properties had lost about 24 percent of their value–a steeper decline than in Manhattan–since peaking above an average of $2 million in 2007. Owners who couldn’t sell in the past two years are trying again, keeping the sale inventory high. Some need to sell urgently. Default notices in the east end of Long Island rose 62 percent to 276 in the first quarter, according to Long Island Profiles, a real estate data service. Lenders have even become amenable to short sales, in which they accept less than the balance owed on a property.
“It is still a buyer’s market,” says Jan Robinson, president of Hampton Homes Inc., a broker in East Hampton. “There are some really good deals.”
In his one-year hunt in the Hamptons, Ross used StreetEasy.com and Redfin.com to track price cuts. As he looked for homes that had last changed hands during the peak years in the mid-2000s, Ross was keen to find out if, and by how much, the owners had dropped the price. “If you can identify the value of something in 2004, you can be pretty certain that that would be the value today,” says Michael Daly, founder of brokerage True North Realty Associates in North Haven and author of Hamptons Real Estate Blog.
City dwellers often make the mistake of valuing a waterfront property in the Hamptons much as they would their own apartment- -on a price-per-square-foot basis, says Deirdre DeVita, a broker at Brown Harris Stevens who helped Ross find his home. “That is not at all relevant here,” says DeVita. She says the land value is the most important factor, determining as much as 90 percent of a sale price.
Even rotting docks and seawalls–vestiges of a more permissive waterfront construction era–can add to the worth of the property. In the town of Southampton, which includes Westhampton Beach, docks built from scratch can be no longer than 100 feet, while the presence of an older dock grandfathers in the potential of building a bigger one. Seawalls along a property have been banned, while existing ones, like the 60-foot bulkhead on Ross’s property, can be refurbished. The tough restrictions convinced Ross to drop his idea of buying a fixer-upper and expanding it with a deck or extra bedroom. “Zoning is brutal,” he says. “You can’t do anything without going through huge numbers of hoops.”
Buyers also need to be aware of the presence of illegally installed amenities such as patios when purchasing a home. Local officials may require that the structures be removed before the property changes hands. “I’d see a house and say, ‘Is that deck going to have to come out?’” Ross says. “And they’d say, ‘Yeah.’”
Ross didn’t get everything he wanted, such as a second bathroom, but the cottage has what he desired most: a nearby saltwater workout. “For me, $875,000 is a very fair price for this property,” he says.
Oshrat Carmiel covers residential real estate at Bloomberg News in New York. firstname.lastname@example.org