Rachel Deahl, writing for The Real Deal Magazine, a New York Real Estate publication, asked me some questions about how the reportedly record Wall Street bonuses might affect the Hamptons real estate market. Below are my answers:
1. Do you think the bonuses will send Wall Streeters looking to buy houses in the Hamptons? More so than in past years?
It will to some. Many Wall Streeters already have homes here in the Hamptons. Some will upgrade and some will renovate, perhaps tear down their existing home and build a new one. A number of them already have the house of their dreams and might look at acquiring third or fourth homes in other resort markets or parts of the world they like to spend time in.
2. How much do you think the bonuses will affect the real estate market on the east end? Will it be a bigger difference than in past years?
I don’t see a huge difference to past years. End of 2005 bonuses were very rich as well and it did give buoyancy to the rental market and the super-premium market (above $15 million).
3. When do you think the effects will start to show? Have people already begun to plunk down money on property as a result of the bonuses coming in? If so, when did it start happening? If not, when do you think it will start?
We have seen an uptick in business here since Thanksgiving, right around the time the bonuses were announced. Santa came to town and they went shopping. While business is not exactly frenetic at the moment (as compared to a few years ago), those that are out shopping are serious and there’s a fair amount of inventory to choose from in several segments of the market. I believe the market will take another step up in mid/late January as those who want to be in their new homes by Memorial Day, the start of the summer season, get down to the business of choosing their places in the sun.
4. What neighborhoods do you think will be hot? Any surprise places? Are people starting to consider lesser known, or less high profile towns, in search of deals? Any activity on the North Fork? Any high profile towns losing some of their cache? What are the hot towns? Streets?
Shelter Island has been very hot. There’s a $35 million waterfront listing there that is fabulous. Those that came out east years ago for the quiet and serenity are seeking out spots like Shelter Island, Montauk and waterfront spots in Amagansett and the North Fork, often properties at the end of long private drives. Yes, the North Fork (Nofo) has been appreciating nicely and there are more and more beautiful homes being built there, but the allure of the South Fork (Sofo) is the ocean. Some of us can’t live without it.
5. Have any big sales already happened in the last few months? Can you provide details? Also, have any major properties gone on the market?
The Stillman property in Sagaponack, made up of an oceanfront home and several adjacent building lots for $65 million, is fairly new to the market. Eothen, the former Andy Warhol property in Montauk, is reportedly selling. There are a number of large, over-$30-million oceanfront listings that are ripe for the picking.
6. Do you think more people might be looking to rent for the summer, than buy? If so, why? And if they’re renting, what addresses/towns will be hot there? Again, any surprises in the list?
Rentals for summer ’07 are strong already. Waterfront, regardless of location, is in demand. While national news about real estate continues to be lukewarm and the financial markets are rather hot, the window of opportunity to make a “real deal” in this market is closing quickly. Those who are buying mainly for investment should not sit out another season and rent. I happen to believe that the Hamptons are still under-valued compared to other markets, such as Sarasota, Naples, Santa Barbara, Malibu, Vail, Turks and Caicos and others, and that the property you pass on today will cost you more next year. Of course, if you are buying here for lifestyle reasons, there is never a better time than right now. Regardless of the reason for purchasing a home in the Hamptons, with proper guidance, you can be assured that your value will appreciate nicely over time. Remember, we’re not making any more oceanfront or bayfront property.