As the chaos on Wall Street has unfolded in recent weeks, observers have waited for the Manhattan real estate market, with its close ties to the financial sector, to show signs of a slowdown. But it’s the East End where the Wall Street meltdown has led to immediate aftershocks, brokers say.
Sales activity in the Hamptons — the popular weekend destination for Wall Street tycoons — has all but stopped, prices have plunged and deals are disintegrating, brokers on the East End said.
“We’re so Wall Street-focused out here,” said Michael Daly, principal broker at True North Realty Associates. “In the past week, it’s like everyone is holding their breath.”
Fashion designer Adrienne Vittadini’s five-bedroom waterfront home in Water Mill, listed with Sotheby’s International Realty, was recently reduced from $6.95 million to $6.495 million, down more than $1 million from its original listing price of $7.6 million, according to an Internet-based listings exchange system. An eight-bedroom home on Parsonage Lane in Sagaponack, originally listed at $9.995 million, is now $8.495 million, while a Bay Avenue home in Water Mill first priced at $4.995 million now is available for $3.995 million.
Judi Desiderio, CEO of Town & Country Real Estate in East Hampton, said in the past 10 days, nearly half of the company’s deals have fallen through or been negotiated at the closing table, while sales prices on many properties have been rolled back an average of 20 percent.
Desiderio attributes the slowdown to the Hamptons’ popularity as a second-home spot for Wall Streeters.
“I’ve always said that there’s an umbilical cord between the Hamptons and Wall Street,” she said. “They get a tummy ache — we have to lie down to feel better.”
“We’re the luxury items,” Desiderio said. “We’re like buying a bigger boat — you only buy it when you need it or you can afford it.”
Before stocks rallied Friday, the S&P 500 had fallen for seven straight days, its longest losing streak since 1996. The declines pushed the S&P 500 down more than 40 percent from its peak last October.
In the past week, Hamptons brokers have seen phones stop ringing, e-mail inboxes sit empty and the flow of visitors at sales offices slow to a trickle, according to Robert Murray, a broker in the Corcoran Group’s Westhampton office.
“Everything’s come to a halt,” Murray said, adding that plunging stock prices have “basically killed any activity. We’re in a holding pattern.”
He said the few calls he’s received this week are from “bottom fishers:” buyers looking for firesale prices. “I’ve gotten calls from people saying, ‘what’s the best bargain out there?'” Murray said.
Despite the perception that good prices are available, many buyers are afraid to act because they’re waiting for the market to bottom out, said Daly of True North Realty, and author of the Hamptons Real Estate Blog.
“Anyone who is in the process of negotiating or moving on a property just appears to be taking a let’s-wait-and-see attitude,” he said. “When we do see a bottom, we’ll see some good activity.”