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Hamptons sees strong demand for ‘modest’ million-dollar homes

Buyers in the Hamptons are competing for lower-priced

Buyers in the Hamptons are competing for lower-priced homes like this Southampton house, which is on sale for $1,175,000, as financial jitters slow demand for pricier properites. March 19, 2016 Photo Credit: Gordon M. Grant

Buyers in the Hamptons are vying to snap up houses that count there as affordable getaways — costing from $1 million to roughly $4 million — even as Wall Street’s jitters have slowed demand for pricier mansions.

Of course, even comparatively modest homes in the exclusive beachside resort area command head-spinning prices. Hamptons homes sold for a median $997,000 in the last three months of 2015, up 2.3 percent from a year earlier but below the $1.1 million high point in spring 2007, before the housing crash, according to a report by the Manhattan-based appraisal company Miller Samuel and the brokerage Douglas Elliman.

“There used to be a low end, a handyman special” that would sell for $400,000 or $500,000, said Joe Hayward, a retired school administrator who is asking $1.175 million for his four-bedroom home on a cove in Southampton. But, Hayward said, “that handyman special is now nonexistent. There are no low-end houses.”

Brokers agreed. “If there’s anything under a million, it’s really, really demand,” said Judi Desiderio, chief executive of Town & Country Real Estate in East Hampton.

Although the overall Hamptons real estate market is bustling, real estate brokers say when prices get into loftier realms — $10 million to $20 million or more — sellers are more apt to negotiate.

In a few cases owners of such trophy homes have dropped prices by as much as $1 million, said Christopher Burnside, an associate broker with Brown Harris Stevens in Bridgehampton. For homes that used to be overpriced, “the corrections are being made, that’s what’s spurring the market,” Burnside said. For the biggest-ticket homes, “it’s got to be the right buyer in the right situation at the right time. They’re prepared to pay a premium for the location, but they’re not prepared — at least in this market — to overpay for it.”

It’s a refrain playing out in real estate markets across the nation, said Jonathan Miller, chief executive of Miller Samuel. “The characteristic of housing right now in 2016 is limited supply at the lower and middle end of the market, and excess supply at the upper end of the market, price growth at the lower end and flat to modest declines in the upper end. I don’t see it as unique to the Hamptons.”

Wall Street’s “lackluster” bonuses also have helped soften prices in luxury housing markets, and the strong dollar has put a damper on investment by foreign buyers, Miller said.

In one indication of the growing gap between luxury buyers and everyone else, the top 10 percent of Hamptons homes sold in 2015 — those trading for about $4 million and up — spent 202 days on the market, up almost 7 percent from a year earlier, according to an analysis by Miller Samuel. By contrast, less expensive Hamptons homes that sold last year were listed for only 160 days, down 7.5 percent from 2014.

The Hamptons are closely linked with Manhattan’s finance industry, which got a scare in January when the stock market had its worst start to the year in more than a century. The market ultimately lost 5.5 percent of its value over the month, and fell even lower in February before recovering its losses in recent weeks.

“In January the stock market really kind of gave everyone a kick in the teeth, and that kick gave us the need for some dental work,” Desiderio said.

In addition, the average Wall Street bonus fell to $146,200 last year, a decline of 9 percent from 2014 and 14 percent from 2013, state Comptroller Thomas DiNapoli reported this month.

That all translates into slower sales at the top of the market, as some buyers scale back their budgets, temporarily delay buying or choose to rent a mansion instead, brokers said.

In search of bargains, deal-seeking vacationers are favoring Westhampton Beach, where prices are lower and commutes into the city can be as much as two hours shorter, Desiderio said. Others are venturing to the more serene — and affordably priced — communities along the North Fork, such as Mattituck and Orient, she said. The North Fork “really has a different heartbeat” than the Hamptons, Desiderio said.

The median sales price on the North Fork was $522,500 in the last three months of 2015, up 14 percent from a year earlier, Miller Samuel and Douglas Elliman reported.

Some East End real estate brokers said investors’ interest in Hamptons real estate has picked up in recent weeks, since the stock market has stabilized.

The $1 million to $4 million price range is especially busy. A new, modern six-bedroom home with a pool in Sag Harbor listed for $3.9 million has attracted two offers, and the listing has not even been sent to other brokers yet, Burnside said. “If it’s new, it sells quickly,” he said.

To be sure, demand for the grandest estates hasn’t dried up.

Hedge fund manager Scott Bommer sold three adjacent properties on Lily Pond Lane in East Hampton this year for a total of $110 million, up from the $93.9 million they fetched in 2014. In December, a Montauk estate once owned by Andy Warhol sold for $50 million. In 2014, hedge fund manager Barry Rosenstein paid $147 million for an 18-acre, three-parcel oceanfront estate in East Hampton — the priciest home ever sold in the United States.

Miller called those eye-popping sales “one-offs,” with little relevance to the rest of the market.

Some brokers say the market for trophy homes remains strong. Those shopping for the most luxurious mansions “are usually financially sound enough to live their lives unencumbered by a small shift, which is what we’re having now,” said Zachary Vichinsky, who co-founded Bespoke Real Estate in Bridgehampton with his brother Cody in 2014. The brokerage specializes in homes and developments selling for $10 million or more.

Among Bespoke’s offerings is a newly built, fully furnished, seven-bedroom mansion on 2.7 acres in Bridgehampton, listed in October for $18.5 million. Located 1.8 miles from the beach along tony Ocean Road, the 9,100-square-foot home includes a tennis court, saltwater pool and pool house, along with a wood-paneled library, eight fireplaces, a spacious kitchen with a butler’s pantry and octagonal breakfast nook, two staircases (one for staff) and an elevator. The 3,100-square-foot basement features a home theater, gym, spa and 1,000-bottle wine cellar.

“The very wealthy and people who understand the Hamptons continue to look at this as a place where they can park a decent amount of money into real property that has weathered financial storms in the past,” Vichinsky said. “I have clients calling me and saying, ‘I’m freeing up some capital, I’m moving capital around, do you have anything for me to buy right now?’”

In some cases, owners of luxury homes decide to test the market.

In Montauk, Robert McBride and his wife, Marion, spent three years overseeing the design and construction of their six-bedroom home, which sits on 1.66 acres and overlooks a 96-acre nature preserve, has a private path to the beach and includes a hot tub, gym, four fireplaces, barroom and 1,500-bottle, Tuscan-style wine cellar. Plus there’s a pool. And a three-story gazebo.

The couple, who have three grown children, decided to list the home last year after a friend offered to buy it in a cash deal, said McBride, a senior vice president with former Sen. Alfonse D’Amato’s lobbying firm, Park Strategies. They’re asking $8.9 million, but they’re taking a philosophical approach to the transaction.

“If we get our price we’ll sell, and if not we’ll keep it,” McBride said. “We feel that the value is there.”

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