Rhinebeck’s honeymoon

Brokers in the Hudson Valley town see 'Chelsea bump,' with more higher-end properties sparking interest
By Barbara Thau | September 01, 2010 07:00AM

From left: Chelsea Clinton’s husband, Marc Mezvinsky, and Hillary, Chelsea and Bill Clinton; Astor Courts estate, where Chelsea Clinton was married, is on the market for $13.5 million.

Chelsea Clinton’s near-royal wedding put a spotlight on the sleepy Hudson Valley town of Rhinebeck, as reporters from all over the globe descended on the village this summer, interviewing everyone from coffee shop owners to neighbors.

But the first daughter’s wedding to Marc Mezvinsky appears to be giving Rhinebeck’s real estate market a welcome jolt even now, long after the television crews have packed up.

Brokers there say the nuptials have drummed up new interest in the slouching high-end market, which could translate into a boost in housing prices this fall and beyond.

The “Chelsea bump” (as Jeff Ackerly, an associate broker with Prudential’s Rhinebeck office, calls it) comes after a long real estate slog.

Like elsewhere, residential prices have fallen sharply in Rhinebeck, which is about two hours north of Manhattan, from their pre-recession peak. Adele Arnell George, principal broker at Northern Dutchess Realty, estimated that prices are down between 20 and 25 percent from their height in 2006.

Also, for the last year or so, most of the activity has come from the lower end of the market. Arnell George said the majority of the listings at her firm are selling in the $350,000-and-under range and that the high-end market has been the weakest.

But — at least anecdotally — that’s beginning to change. In August, traditionally a very slow month, “[activity] has come alive like you wouldn’t believe,” she said, attributing the unusual timing to the halo effect from the Clinton wedding.

“We’re talking the $700,000-and-above market that was not moving before. I’m getting calls from people in New York City coming to look [at properties]. … We must be booking dozens of appointments a day to see high-end properties.

“We’ll see if it translates into sales.”

While a handful of Rhinebeck homes in the $1 million-plus range would sell every month two years ago, recently it’s been “almost an oddity,” Arnell George said. “The people with money [have been] holding back on spending.”

Brokers at Houlihan Lawrence also saw an uncharacteristic flurry of activity starting in late July and August. That’s when potential buyers magically seemed to materialize, and showings for country homes surged more than 50 percent, said Robert Morini, the brokerage manager at the firm’s local office.

“It could be somebody looking for a small cottage, a converted barn, or a historic Hudson River estate.”

He said while the economic rebound is undoubtedly responsible for some of that activity, having wedding guests like Vera Wang, Ted Danson and Madeleine Albright in town didn’t hurt. The Clinton wedding “has given people confidence in the value of the community.”

Indeed, in August Houlihan Lawrence showed six times more homes in the $1 million range than during the prior period. The firm is now closing in on the sale of a $1.5 million property. When that’s finalized, it will have been the first house to sell in that price range in nearly a year.

Whether the high-end boost translates into a sale for the 50-acre Astor Courts estate where Clinton was married is still unclear. The estate had been languishing on the market, but after the wedding the Wall Street Journal reported that the asking price was increased by $1.5 million to $13.5 million. According to news reports, the owners, Katheleen Hammer, a Clinton donor, and her husband, Arthur Seelbinder, a real estate developer, bought it for $3.2 million in 2005 and then poured millions of dollars into renovations.

The town, which is home to some high-profile residents such as photographer Annie Leibowitz, is something of an anti-Hamptons, with a sophisticated yet unpretentious vibe.

Outside of the downturn, it’s long been a robust second-home market, with weekenders drawn to its historic attractions (George Washington, Alexander Hamilton and others stayed at the Beekman Arms in Rhinebeck during the Revolutionary War), and cultural offerings such as the summer stock theater, the Hudson Valley Philharmonic and the art scene that emanates from nearby Vassar and Bard colleges.

Brokers say Rhinebeck was stung less by the recession than New York City in some respects, partly because it did not see hyper building during the boom. The town has also been largely insulated from foreclosures.

Yet home prices have taken a hit as the slump in second-home sales has dragged down the market. “The most compelling statistic in Rhinebeck is that the median sale price in 2008 was $555,000. The median price in 2009 fell to $323,000,” said Ackerly, citing Multiple Listing Service figures.

The stock market decline, coupled with job losses on Wall Street and in the banking industry, put fear in the hearts of second-home buyers in the $400,000-to-$700,000 — and up — price range, he said.

“That left sales to local market buyers, including retirees and young first-time home buyers, who pulled the median prices down significantly because the weekend market fell out.”

As a result, “the last couple of years, the low end has been selling quite well, and the high end has been very sluggish,” Ackerly said.

“In 2009, I only had one sale over $1 million in the entire town of Rhinebeck, which was unheard of [a few] years ago,” he said.

The town, basking in the glow of the Clinton wedding, has drawn a slew of curiosity seekers looking at weekend properties and wondering if they should buy when interest rates are “ridiculously low,” Ackerly said.

If these weekenders turn from browsers to buyers, that could push the average Rhinebeck home sale price into the $400,000-plus range, he said.

Ackerly is optimistic. The market has improved from 2009, with the home stimulus tax credit nudging Rhinebeck home sales from February to June.

And as of mid-August, business was up between 10 and 20 percent from the same time last year, Arnell George said.

Sales have been generated by a mix of second-home buyers from the city and locals.

“Potential buyers appear to have surmised, ‘If a celebrity would pick Rhinebeck for their destination wedding, maybe I should look into this,'” Morini said. “It’s like the Good Housekeeping seal of approval.”