While much of the fuss this season in East End real estate has zeroed in on the slowdown in the tony Hamptons, its lower-profile neighbor to the north is on a similar real estate rollercoaster. Brokers said that while Long Island’s North Fork was taking off a few years ago, the momentum on the residential side has taken a hit since the economy turned.
But after a rocky first quarter — which was marked by a nearly 38 percent drop in sales compared to the same time last year and a nearly 45 percent increase in the number of days homes were staying on the market — the North Fork seems to have rebounded somewhat in the second quarter.
New numbers, which were released late last month by appraisal firm Miller Samuel and brokerage Prudential Douglas Elliman, show that the median sale price on the North Fork was up 13.1 percent to $605,000 from last year and that the number of sales shot up by 28.6 percent to 189. While the vineyard-dotted North Fork saw more of an uptick than the more swanky Hamptons market did (numbers there were down across the board), not all of the figures were positive. Listing inventory was up 12.7 percent, and discounts between final listing prices and sales prices also saw a spike.
“There are contradictions in the numbers because inventory is trending up, but at the same time, sales activity has increased,” Jonathan Miller, president and CEO of Miller Samuel, said.
Miller said that while the North Fork sales and price increases were the most positive part of the East End report, they might be a “statistical anomaly” based on data timing and a well-performing high-end market. He also noted that the North Fork market is far smaller than the South Fork market and is therefore more easily skewed.
“It doesn’t match my expectations,” he said. “On the front lines, I don’t think there is any expectation that prices are rising on the North Fork.”
Indeed, brokers on the North Fork — which stretches from Riverhead to Orient — said discerning investors and bargain-hunting homebuyers are increasingly scouring the area for deals because of the economic slump. And while they are seeing a sluggish residential market, they said there are bright spots on the commercial side and in summer rentals.
This month, The Real Deal set out to examine the state of the market on the North Fork beyond the numbers to see how it’s holding up compared to the Hamptons, and to see which buyers and sellers are taking chances there.
While brokers said that prices of coveted waterfront properties on the North Fork have risen, or at least stayed flat since last year, they noted that inland homes are seriously hurting.
The CEO of Town & Country, Judi Desiderio, said inland properties on the North Fork, which have dipped in price between 20 to 25 percent since 2005, are still far harder to sell than their waterfront counterparts. She said the bulk of the price drop has occurred since the slowdown hit last year.
As the economy has worsened, many investors who had hoped to capitalize on the North Fork’s heyday by flipping homes for a profit are instead selling at a low point, brokers said.
One broker described a “beautiful creek-front home” in Southold that first went on the market for $1.5 million after being built in 2006. A deal is currently being worked out for $599,000. The broker asked not to be identified because the sale hasn’t closed yet.
Others said that the market has indisputably taken a hit, but that many sellers are still asking for the prices their neighbors got during the boom times, a factor that has slowed sales.
“You can’t think like in the days of 2005 and 2006. It used to be that people could just throw out prices. Buyers are a bit more savvy, so sellers need to be savvier as well,” a senior vice president for the Corcoran Group, Sheri Winter Clarry, said.
Looking for deals
Some are looking to the North Fork for investment opportunities.
In a phenomenon that heated up about two years ago when prices first began to dip, a growing number of twenty- and thirtysomething Manhattanites are buying starter homes in the under-$500,000 range while continuing to rent in the city.
A North Fork broker for Prudential Douglas Elliman, Gayle Marriner-Smith, described the buyers as young professionals who cannot afford to buy in Manhattan, and so are instead turning to the North Fork to make their first real estate purchases. She said a drop in asking prices has actually prompted more of those young buyers to look to the North Fork than ever before.
Meanwhile, with the stock market in flux, some local agents said the North Fork is also attracting a growing number of investors interested in high-end properties, which can be found at significantly more affordable prices than in the Hamptons. And, in fact, the second quarter report shows that the top fifth of the market on the North Fork saw a 6.8 percent jump in price.
“I’ve been working with several investors who are pulling their money out of the stock market. They see they can buy beautiful waterfront properties and wait for the market to turn around in five to seven years,” Marriner-Smith said.
Marriner-Smith described one wealthy couple from Manhattan, who she said has divested much of its stock portfolio and purchased three properties in the $1 to $2 million range — sound-front, bay-front and creek-front homes. The couple is now mulling over a fourth plot on a saltwater pond. However, they are more of the exception than the rule.
The North Fork’s waterfront properties are drawing the eye of European investors, several brokers said. Desiderio said she is privately showing a $12 million sound-front property on the eastern end of the fork — a property which would run between $40 and $50 million in the Hamptons — almost exclusively to Europeans.
She declined to identify the exact location of the property at the owner’s request.
Rentals and commercial
Brokers say that while the rental market has changed, it is generally seeing a boost.
Carol Tintle, a senior vice president at Daniel Gale Sotheby’s International Realty, said the North Fork’s lower prices have attracted a growing number of renters who would otherwise stay in the Hamptons. She said a three-bedroom home near the beach in the Hamptons would rent for roughly $80,000 a season, while a similar property on the North Fork costs about $20,000 for the same stretch of time.
“A lot of people are scaling down,” she said. “They felt like they could get a whole season here for the price of two weeks in East Hampton.”
Desiderio said the North Fork’s rental market is the strongest she’s seen it in 15 years.
Nonetheless, some brokers said they have seen old-time North Fork renters go for weekly and monthly rentals. Marriner-Smith said several of her clients, who normally rent homes for the season, downgraded this year.
As for the commercial side of things on the North Fork, brokers said the market is surprisingly strong, largely because it is catching up with the residential growth that’s already taken place.
Chase Bank is building two new locations, one in Mattituck and another in Southold, according to Thomas McCarthy, who is the president of a self-named real estate firm in Southold. McCarthy recently brokered a roughly $585,000 deal for an old real estate office on Main Street in Southold that is slated to become a hardware store.
Kristopher Pilles, managing partner of North Fork Commercial, a company that specializes in commercial real estate and investments, said that Hudson City Bank is building a new location in Mattituck and that an old firehouse in Greenport is under contract to become a microbrewery.
But the highest-profile commercial transaction on the North Fork occurred several months ago when Nello Balan, the restaurateur behind fashionable eateries on the Upper East Side and in Southampton, reportedly purchased two rundown buildings on Main Street in Greenport, with plans to open a restaurant and a boutique hotel.