Sagaponack back from dead

With prices once down 40 percent, the little Hamptons hamlet is coming back strong

May.May 02, 2011 02:07 PM

155 Trees Lane in Sagaponack, which is listed with Elliman’s Paul Brennan for $25 million

The tiny village of Sagaponack, tucked into the larger town of Southampton out on Long Island’s East End, has perennially been one of the wealthiest zip codes in the United States.

Perhaps as a result, real estate in the hamlet (which has a population of 582) suffered even more than its neighboring Hamptons towns during a downturn that did not discriminate against luxury markets.

Judi Desiderio, CEO of Town & Country Real Estate, said prices in Sagaponack tanked by as much as 40 percent.

But as Wall Street profits — and the high-end market — have come back, so has Sagaponack.

“Several specific markets, such as Sagaponack South, which was hit the hardest, have now bounced off the bottom to near their highest levels,” Desiderio said during a recent Q & A with The Real Deal.

Simon Harrison is a former resident of Sagaponack and president of Simon Harrison Real Estate. When asked to describe the current state of the market there, he said: “The word that comes to mind is ‘comforting.’”

However, he then quickly added: “It is good to buy when there is blood on the streets, but there was certainly a fair amount of fear and loathing in Sagaponack [before things started bouncing back].”

In fact, the Sagaponack recovery has been more pronounced than that of many neighboring Hamptons towns, and the market there is now close to its pre-recession price points, leaving many onlookers asking themselves: “Recession? What recession?”

Before the crash, real estate in the former farming village had risen, Phoenix-like, for four straight years.

“It was the golden child of the Hamptons before the crash,” Desiderio said. “When it got all puffed up, it went up 100 percent in 18 months.”

But when it crashed, it crashed hard.

Paul Brennan, Hamptons regional manager for Prudential Douglas Elliman, summed up the market dynamics cleanly.

“Two words,” he said when queried about the resilience of Sagaponack. “Goldman Sachs.”

“When Wall Street stopped, everything stopped in Sagaponack, because there are not that many transactions that take place,” added Brennan, who has a property at 155 Trees Lane in Sagaponack that is listed for $25 million. “You are not going to get the number of units sold like you see in Southampton [village].”

Unlike for most homeowners across the country, the recession for super-affluent enclaves did not result in a wave of foreclosures, but instead, pushed prices down (in relative terms, of course) from jaw-dropping to merely expensive.

Market reports reflect the wild swings over the past few years.

According to data from Brown Harris Stevens, between the third quarters of 2007 and 2008, when mortgage financing was dried up, the number of houses that sold in the area that includes Bridgehampton, Sagaponack and Wainscott dropped by a stunning 59 percent — from 41 units sold to 17. But just one year later the number of sales climbed back up to 31.

Jonathan Miller of appraisal firm Miller Samuel said the conditions that drove the peak in 2007 — employment, bonus compensation and, most important, lending standards — are not back to what they once were.

“We are not back to 2007, but on an individual basis an argument can be made that we have reduced the gap. It is hard when you are sitting here and see a $30 million sale and wonder, ‘What would that have gone for at the peak? I’m saying that sale would not have gone for $30 [million] at the peak, but would have gone for $45 [million].’ So one or two sales don’t define a market,” he said.

But as Wall Street profits have shot up — the six largest U.S banks reported earnings of $45.7 billion in 2010, a roughly 277 percent jump over the $16.5 billion they reported in 2009, according to Thomson Reuters — so have Sagaponack sales.

Recent sales have included a six-bedroom house on 232 Gibson Lane that sold for over $11 million in January, a five-bedroom house on 217 Hedges Lane that sold for $7 million in November and, last month, a seven-bedroom home at 483 Parsonage Lane that went for $9.5 million.

In the most exclusive beachfront portions of Sagaponack (the beachfront in Sagaponack South), it is not uncommon to see transactions in the high seven to low eight figures.

In May 2007, a 1,500-square-foot oceanfront house on 23 Gibson Lane sold for $8 million, then resold five months later for $11.6 million. By comparison, in February 2010 the same house sold again for $10 million. The sale price was off from its peak in 2007, but still 25 percent above its initial price point when the market was flying. And, the property is currently on the market for $11.6 million.

Down the road at 240 Gibson Lane, a developer picked up an acre-sized lot in 2007 for $3.5 million. The house on this lot is now expected to fetch close to its asking price of $11.6 million.

Meanwhile, last May, Sagaponack became home to the priciest sale in the country for 2010, when a hedge-funder named David Tepper bought a 6.5-acre gated property, also on Gibson Lane, from former New Jersey Governor Jon Corzine’s ex-wife for $43.5 million.

In February, Billy Joel sold one of two residences on Gibson for close to its $12.5 million asking price. Joel had paid $11.6 million for the property in 2007.

Elliman’s Brennan, who has lived in Sagaponack for the last 20 years, said in the last 10 years the community has morphed from a quiet little farming area (the name Sagaponack comes from the Shinnecock Indian word for “land of the big ground nuts,” a reference to potatoes that were farmed in the area) that was home to a few literary celebrities, to the hottest town in the Hamptons. A town that decades ago housed literati Truman Capote, Kurt Vonnegut and James Jones grew to include Joel, Corzine and Richard Gere.

“It was the ‘off-beat’ other Hampton, so to speak, and then all of a sudden it took off,” said Brennan.

Brokers Ingrid Brownyard and Amelia Doggwiler, both top Sagaponack agents at Brown Harris Stevens, are overseeing the Houses of Sagaponac project, which is being curated by famed architect Richard Meier. (Yes, it intentionally uses an alternative spelling of the town’s name.)

Back in the 1980s, Meier, at the urging of the developer Harry Brown, invited 32 architects to submit designs for a single-family house to be built and sold in Sagaponack.

After the project stalled for several years, eight uniquely designed houses by a collection of high-profile architects, including Frank Lloyd Wright, have now been built, and 12 more are on the way. Of the eight houses that have been completed, seven have sold for prices ranging from $3 million to $5 million.

“The village has been astute in its mission to retain the character and aesthetic of the village — it was an agricultural community and it has not lost that veneer,” said Doggwiler before quickly adding, “and the taxes are low.”

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