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We are seeing more “positive” real estate reports published these days. As a matter of fact, the most positive reports since the crash of 2008.
The last quarter of 2012 was a big quarter for property owners who were tax averse or had a great sum of wealth tied up in their property or both. The looming threat of the 2103 increase in capital gains, was too much to bear for some. A number of sellers dropped their asking price by millions to avoid paying additional taxes (perhaps in the thousands) to the government. The reality is, many of those sellers were finally motivated to price their homes at market value after years of wishing, wanting, hoping for the price they would’ve, could’ve, should’ve taken in 2007.
Buyers have been waiting patiently on the sidelines for sellers to get real with offering prices. It seems that the threat of increased taxes, only trumped by death, was just the elixir that brought motivation home to roost for many. Quite clever, that Uncle Sam.
So, while Manhattan and The Hamptons are seeing record sales, many other parts of the nation are seeing increased sales as well. California, Arizona and Florida have seen increased values and numbers of sales, but coming back from a 50%, 60% or even 70% drop in value was inevitable. Even as my friend, Alison Rogers, writes in Time Business about Home Prices “Jumping”, it’s not happening in every market.
Jonathan Miller posts about the Pre-Covery (a term shouted out by my other friend Phil Faranda, one of the sharpest tools in the shed ). Read the Jonathan Miller post and the Robert Schiller NYTimes piece for more insight.
The way I see it, business has maintained a pretty healthy level of activity as we have arrived into 2013 and I believe it is going to be a good year for many in the market, but for different reasons. We are still left with three basic groups in today’s real estate economy; The Good or the “Haves”, The Bad or the “Holder-On-ers” and the Ugly – the “Have-Not’s”.
The Good (Haves) may have lost some of their net worth during the last 5 years, but still have plenty of assets at their disposal. They know that many property values are down to 2004/2005 levels and the cost of borrowing money at historic low levels. The Good know now is a good time to invest. While many sellers have been resilient, holding on to their 2007 asking prices, the Good have been even more resilient. They walk through homes, take notes, ask about length of time on the market and price history (or more often tell the agent about them based upon their online research). If the price is out of line, they don’t bother to make an offer, unless its a one-of-a-kind, gotta-have property that has particular appeal to them. They don’t need a recovery.
The other sub-set of Haves are the young, responsible up-and-comers who were too busy either finishing school or getting their career started during the fat-and-happy days. They didn’t get caught up in the Irrational Exuberance. They watched home prices escalate rapidly in the ’00′s thinking they may never be able to buy a home and are now delighted to buy their first home from a bank or a motivated seller at prices they saw 8 years ago.
The Bad (Holder-On-Ers) are just holding on for dear life. They were either able to move laterally in their career or are still there, watching company blogs and listening for the next round of layoffs…kind of like my older buddies waited for their number to be called in the ’69-’72 draft. Many of them resisted using their homes as an ATM during The Roaring ’00′s and are able to pay their bills and get by. Some were hoping for retirement or an easier pace of life by now, but the depletion of their investment accounts and loss of value in their homes has made that unattainable. Maybe they would like to move, but can’t afford to sell their house, buy a new one and the jobs that were once plentiful are now scarce. Left wondering why the stock market is back up to 2007 highs and their investment accounts and property values are not, they feel stuck, waiting for something to get either better or worse. They are hoping for a recovery.
The Ugly (Have Nots) have lost the life they once new, only a few short years ago. They not only over refinanced on their home (or homes) at the peak of the market, but they lost their ability to pay for it when the job market crashed or their company went out of business. Some of them were making $200k a year as a sales rep for just showing up and now can’t get hired for $75k, even though they learned to tap dance to Yankee Doodle Dandy. Many of them saw their credit lines shut down, their credit card interest rates double or triple and they are drowning in a sea of lack. Not a fun place to be. Others are making decisions for them right now. Maybe they were granted a loan modification and since then, have failed to keep up with new payments. They’re either just waiting for the bank to take their home or it already has and now they are renting. Dazed and confused about how the last 4-5 years could have happened. They are praying for a recovery (and filling out their Peace Corps application).
One thing is for sure: the economy is getting better – incrementally - for SOME , but not for all. Fortunately for us, the Hamptons has more of the Good…and Wall Street bonuses are unfolding….and spring rental and sales season is here…and the snow is melting…and life could be much worse.
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|
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 …
The millersamuel.com/reports page on our corporate web site provides more information on the reports we prepare as well as their methodologies. You can download the reports on that page or on the report icon below
2010 reported Sales Figures for the first week in May are up from 2009 and down from 2008 and still way down from 2007.
Looks like this next 3-6 months, with values down 25-35% and interest rates still low, will be the time that buyers look back on and say either:
“I’m glad I bought when I did”, or ” I wish I bought in 2010″.
I’m not saying we are going to see a “v” shaped recovery by any means, but take a look at a mortgage table and see what a one point increase in interest rates does to your monthly payments. One point could offset another 10-15% or greater drop in values, and do you think that both values will continue to drop AND interest rates will stay this low? Sure, the Greece debacle and the fat fingered Wall Street trader dinged rates this week, but it’s conventional wisdom that rates can only go up. For may people, it makes quite a difference in affordability. If you are a cash buyer, it looks like values are stabilizing.
If you’ve read this blog in the past, you know that I am a reformed bull. I didn’t believe that what happened here ever could or would. I also believed that Manhattan and the fabulous Humptons were immune to the events that took place in more ordinary and mundane places. Well that was nothing that a gigantic kick in the ass and a swift 4×4 across the bridge of the nose, courtesy of the 2008 real estate market, couldn’t cure.
Much of the posts here the last two plus years have been reporting what was happening in the East End real estate market and about news that might impact our market. No gossip, no unsubstantiated claims of “the market is back”. Some colleagues have accused us of “spreading bad news”. Well, the news is the news and there hasn’t been much good news to spread. Even today, when the headlines read “Sales up over 100%!”, the fact of the matter is that sales are still down nearly that same amount from 2006 and 2007 and all the denial and attempts at hiding the facts won’t change that. Through the relationships I have developed in the industry as well as my time working with Redfin on Long Island, even this Hamptons broker has come to understand and appreciate the difference between transparency – showing all the facts- versus marketing – showing only the good stuff that you hope will compel people to do what you want them to do.
Property Shark, Zillow, Trulia, Street Easy, as imperfect as they are, still provide much of the information that brokers have, for generations, tried to keep private in hopes of keeping the buyers in the dark. The curtain has been pulled back, and agents need to stop stammering around like the befuddled little man who has just been exposed.
Buyers and even sellers are calling for the implementation of an MLS on the South Fork. More and more sellers are choosing real estate brokers who are Long Island MLS members to sell their homes because they realize that they will expose their listings to many more potential buyers, increasing the likelihood that it will be sold. I hear that a group of South Fork agents at one of the most established brokerages are putting together a petition to have their broker, who happens to be a member of MSL “west of the canal and on the North Fork” join the MLS in their “east of the canal offices” – Blasphemy!!! But what happens if those gum chewers with big hair from “up-island” come to sell our properties?!? Heaven forbid!
I guess you’ll just have to sell the property and fulfill your fiduciary responsibility to your seller.
So, glass half full? – or – glass half empty? Neither – just half a glass.
East End Sales Statistics
Week Ending 05/09/08
Number of Sales 66
Total Dollar Amount $97,638,609
Median Price $ 617,450
Average Price $ 1,479,373
Week Ending 05/08/09
Number of Sales 28
Total Dollar Amount $19,396,914
Median Price $ 489,050
Average Price $ 692,747
Week Ending 05/07/10
Number of Sales 41
Total Dollar Amount $44,854,933
Median Price $ 740,000
Average Price $ 1,094,023
April 09, 2010 06:30PM
By Sarah Ryley Sales activity appears back to normal on the East End of Long Island. According to the Corcoran Group’s quarterly market report, released today, there were 466 residential sales recorded in the Hamptons and on Shelter Island last quarter, compared to 208 during the first quarter of 2009 and 413 during the first quarter of 2008. Click title link for more.
ED: Back to normal? Looks like 50% of Q1 2007 Must be the “New Normal”.
|info : http://www.lirealestatereport.com/QuarterlySalesMaster.asp as of 4/10/10|
The sales statistics for this particular week, from the last three years are below.
These sales represent “deals” that took place in the last quarter of the preceding year..
Notice that, for 2010, the number of sales and median price are both recovering slowly and the average sales price is back up to hey-day levels of over $1.7M, thanks to a couple of over $10M sales this week, namely Dennis Suskind’s sale of 9 Morgan Hill Way, Bridgehampton for $11,149,900. The original listing price for this home was $24M back in 2007. Also, one of my favorite Hamptons houses, 16 Windmill Lane sold for $12,500,000. The brainchild of real estate developer and broker Antonella Bertello, famed architect Francis Fleetwood and one of the Hamptons finest builders, Stanley Dalene of SDC Construction is a stunning manse with three master suites and several gathering rooms with large fireplaces. I dare say that $12.5M was a nice price for that property.
Without these two sales, average would have been around $1M.
East End Sales Statistics
Week Ending 03/19/10
Number of Sales 34
Total Dollar Amount $57,883,054
Median Price $ 660,000
Average Price $ 1,702,443
Week Ending 03/20/09
Number of Sales 29
Total Dollar Amount $40,781,459
Median Price $ 475,000
Average Price $ 1,406,257
Week Ending 03/21/08
Number of Sales 40
Total Dollar Amount $48,940,292
Median Price $ 685,000
Average Price $ 1,223,507
Regarding lis pendens, the first step towards foreclosure, these figures are steadily rising.
Not only are sub-prime loans ending up here, but the thousands of prime, interest -only 5/1 ARM’s that were taken, banking on steady appreciation are now coming in for a reset. These loans were used for homes up to $10M and many of the buyers, with the economy having tanked, don’t have the income to either make the new payments or to refinance the loans, especially since there really is virtually no market for jumbo refi’s today. Looks like this number may continue to grow, with “strategic default” becoming an option for more and more of these properties. This should make for some good buys out there this and next year, since some owners have the stomach for waiting out the bank and others don’t…
East End Lis Pendens Statistics
Week Ending 03/19/10
Number of Filings 22
Total Mortgage Amount $13,307,188
Median Mortgage $ 489,000
Average Mortgage $ 604,872
Week Ending 03/20/09
Number of Filings 18
Total Mortgage Amount $10,682,361
Median Mortgage $ 453,500
Average Mortgage $ 593,465
Week Ending 03/21/08
Number of Filings 12
Total Mortgage Amount $4,313,300
Median Mortgage $ 321,500
Average Mortgage $ 359,442
East End Sales Statistics
Courtesy of LIRealEstateReport.com
Week Ending 02/20/09 02/19/10
Number of Sales 17 75
Total $ Amount $17,027,220 $93,384,952
Median Price $ 547,000 $ 760,000
Average Price $ 1,001,601 $ 1,245,133
YOY that’s an increase of:
- over 400% on Number of Sales
- over 500% on Total $ Amount
- nearly 39% Median Price and
- 25% Average Price
This is a weekly report, however sales have been up in recent weeks as well, signifying a positive sales trend.
THAT is significant…but will it last?
* Note – REPORTED sales means that these sales were publicly released by Suffolk County and reported by various agencies, including LIRealEstateReport.com, this week.
These sales actually closed previous to this week; 22 closing in the last few months of 2009 and 53 closing in January 2010.
Those closing were the result of “deals” or “accepted offers” that usually took place 60-90 days or more before.
Therefore, for the most part, these sales reflect the market activity in Sept/Oct 2009.