Hamptons real estate booming at top, bottom
Related mediaWhat a few million can get you in the Hamptons
Fireplaces: seven, two of them remote-controlled.
Bathrooms: 17 1/2.
Estate managers: two.
The total cost to rent this 21/2-acre Water Mill estate for the summer: $760,000. The listing price: $12.9 million.
This year, even as home prices stayed flat across the rest of Long Island, the Hamptons median sales price rose nearly 12 percent in the first quarter compared with the same period in 2011, according to a report by appraiser Miller Samuel and Prudential Douglas Elliman.
Rental prices are a little softer than last year, but the market is bustling. And in what local real estate experts describe as a striking sign of confidence, a few builders are constructing sprawling homes "on spec."
"This year the big story is the high end is back in full swing," said Judi Desiderio, owner of Town & Country Real Estate.
Wealthy vacationers are not the only ones who should care about the fortunes of the Hamptons real estate market, said Assemb. Fred Thiele Jr. (I-Sag Harbor). The East End is a "property tax cash cow," with 8 percent of Suffolk County's population but 34 percent of its property tax base, he said. The county faces a $149-million hole in its budget this year.
"In the financial condition they're in, that's a good thing," Thiele said.
A recent sign of strong sales: A 2 percent tax on East End home sales -- the first $250,000 is exempt -- contributed $6.1 million to the area's land preservation fund in April, up 21.6 percent from April 2011, Thiele said. The increase stems from a surge in tax collections in East Hampton.
The median home price in the Hamptons has risen since its low point after the housing collapse -- from $696,000 in the third quarter of 2010 to $780,000 in the first quarter of 2012, according to Miller Samuel. However, prices remain 29 percent below their $1.1-million peak, reached in the second quarter of 2007.
Recovery at top, bottom
The nascent real estate recovery, however, is uneven. The Hamptons housing market has taken on a barbell shape, brokers say, with high-end homes and those that count there as entry-level -- that is, less than $1 million -- attracting the most interest, while many homes in the middle languish by comparison.
One property near the market's pinnacle is a new, modern waterfront home in Bridgehampton. With a heated pool overlooking ocean dunes, ceilings up to 15 feet and a rooftop terrace with a fireplace, full bar and views of the ocean and Sagg Pond, the 9,500-square-foot house lists for $30 million.
"There's definitely been some major activity in the high-end market," she said.
Houses for less than $1 million are also selling well, as low interest rates allow buyers to snap up a relatively modest beach house, brokers said.
"That person who was pretty much locked out can now get in," said Dottie Herman, president of Prudential Douglas Elliman.
Among the most sought-after features in new middle- and high-end homes are "smart" technology that can perform security checks or warm up a house remotely, and energy-saving "green" construction, said Cia Comnas, a broker at Brown Harris Stevens of the Hamptons.
Mica Diamond, a life coach whose custom-built home in North Haven is on the market for $9.5 million, said features such as solar panels and geothermal heating and cooling cost more up front, but the energy savings paid off within three years. The five-bedroom home was originally listed last year at $12.5 million. "We're just looking for the buyer who has that chemistry, that it's their home," Diamond said.
Renters pay big money
Not everyone in the Hamptons is looking to buy. Summer renters continue to pay well into the six figures, although some are waiting until the last moment to extract discounts, and owners are agreeing to rent by the month instead of the full season, brokers say.
Michael D'Alessio, a real estate developer who owns the 10-bedroom, 17 1/2-bath estate in Water Mill, said three families are renting it for one month each. The property features a 75-foot pool, 20-seat spa, sunken tennis and basketball court, outdoor kitchen, bar and 700-bottle wine cellar.
"That's what this house was built for: entertaining on a grand scale," said Enzo Morabito, a broker with Prudential Douglas Elliman.
All too grand, according to the Town of Southampton, which cited D'Alessio in February for running an illegal short-term rental home. Settlement talks are under way, said Michael Sendlenski, an attorney for the town. D'Alessio said he had not known about the ban on rentals of less than 30 days.
The Hamptons housing market is not subject to the same economic forces as the rest of Long Island, said Pearl Kamer, chief economist with the Long Island Association. High-earning Wall Street executives and wealthy foreigners keep prices aloft, even as the rest of the Island faces a continuing foreclosure crisis.
"They're really an isolated market," she said. "There's a limited supply and a lot of demand."
That demand has fueled new construction, especially in trendy areas such as Sagaponack, where the median home value of $3.5 million makes it the nation's priciest small town, according to Bloomberg Businessweek.
In some cases, investors are flipping the new homes, said Jim Zizzi of James V. Zizzi Contracting in Quogue. Some of the homes Zizzi has been hired to build have sold within six months -- in one case, even before completion, he said.
"You go down the roads," said Michael Benincasa, chief building inspector for the Town of Southampton, "and you think you're in the midst of a building boom."