An October sales drop prompted Hamptons real estate broker Cee Scott Brown, one of Alan Schneider Associates’ top-producing real estate brokers, to wonder if a bubble had burst over the tony East End of Long Island. But, by the new year, he and colleagues wondered what the fuss had been about.
Though Brown was worried when his peak season lagged his 2004 sales – by nearly 30 percent in October alone – he says the dip appears more like a blip in a market that now shows unexpected strength, despite a cooling of the New York City market, where many Hamptons buyers live.
“The best seasons for real estate in the Hamptons are the fall until November and then things pick up in late January and keep going until Memorial Day,” says Brown. “Instead of slowing down in November, things started slowing down dramatically in October. In looking back, I think a lot had to do with the natural disasters, the oil prices, and the big question: Is there a real estate bubble? I think buyers were cautious because of all the media hype over the coming bubble.”
But, for Brown, the new year has produced a robust market and a new question: What bubble? His sales for the first part of January alone are up 25 percent compared to this time last year. While figures for the whole East End market were not available at press time, anecdotal reports suggest a pickup that’s likely to continue as Wall Street bonuses are converted to weekend homes. That’s even more likely this year, as bonuses hit a record $21.5 billion, according to the New York state Comptroller’s Office. In several interviews, brokers are bragging as loudly as those Wall Street bonuses.
Brown, for example, sold five houses in January, ranging from a $665,000, three-bedroom house surrounded by an East Hampton tree farm on a busy street to a $3.5 million mansion in the same town. For him, it’s a happy market correction, with a bit of moderation added.
“You could still say there has been somewhat of a correction,” Brown says. “I don’t think the prices are going to continue to escalate like they were. People are taking a little more time to make a decision. But we live in a rarified community. I mean, New York City and the Hamptons are not like the rest of America. People here have money and they are willing to spend it.”
In interviews with other brokers in Hamptons real estate, agents appear to be of two minds about the current market. There are those in the Brown camp. They see a robust market that will not slow completely, even with any Manhattan slowdown.
Others preach a bit more caution. They don’t necessarily see signs of a major slowdown this year, but say the jury is still out.
“The Hamptons’ market is still up in the air,” says Peter Saros, a broker at Hampton Lifestyle Realty. “We’ll know better by the end of February. Things are so linked to the overall economy.”
There are still headline buys that make the bulls roar on the beach, such as last month’s $12 million purchase of a one-bedroom house on four acres on the waterfront in East Hampton. It became the home of Michigan’s Robert Taubman, son of Albert Taubman, the former Sotheby’s chairman.
Still, some brokers wonder if the boom will grow as noticeably as it has over the past five years. For example, the median price of a house in East Hampton was $380,000 in 2000, according to Suffolk Research Service. In 2005, the median price had risen to $830,000.
“This stuff can’t keep going up or else it would take the national debt to buy a house out here in 10 years,” says George Simpson, president of Suffolk Research Service, which tracks prices and trends on the East End.
Some brokers see “the democratization” of pricing in areas that were less desirable, such as the town of Hampton Bays, becoming more stratified. In Hampton Bays, the median price for a home in 2000 was $178,000. It hit $ 455,000 last year.
“It used to be if you went west of the Canal, you can find better deals in places like Hampton Bays,” says Brown. “There are still deals there, but the deals are becoming fewer and fewer. The towns are slowly becoming more equally priced.”
Indeed, don’t expect to find deals in Hampton Bays without a tough search. “There are so many people looking for deals it is very hard to find one,” says Saros.
The sudden new year’s growth is tied heavily to those record Wall Street bonuses. “We’re very dependent on the economy and Wall Street and the bonuses this year have been very generous and a good portion of that flows our way,” says Peter Hallock, president and owner of Allan Schneider Associates. “Typically, we are six months to a year behind Manhattan.”
Hamptons rental record could be shattered this summer
By Tom Acitelli
At least a few deals could shatter in the coming months the current summer rental record for the Hamptons. That record was set in 2004 when Russian aluminum heiress Anna Anisimova rented socialite/songwriter Denise Rich’s sprawling Southampton mansion for $550,000.
While the Hamptons rental season doesn’t generally start in earnest until President’s Day later this month, already several contenders are evident and could break the record – if they get their asking price.
Take the waterfront house on Georgica Pond asking $600,000 for the summer. It’s 25,000 square feet on five acres, and includes a heated pool, a gym, a spa, and a tennis court. At least two other mansions, in fact, both in Wainscott, were also asking $600,000 for the summer as of late January.
One, on a private inlet leading to Georgica Pond, features eight bedrooms, a barber shop, a beauty salon, and a screening room for 122. The other one also boasts a screening room – albeit for 110 people – as well as an indoor spa and pool.
A few other Hamptons homes are asking at least $500,000 in rent this summer, making Anisimova’s nearly 2-year-old record seem downright paltry (though it grabbed headlines at the time).
Rising interest rates could be a possible reason for a new rental record. In the past couple of years, some of those who traditionally rented on the East End opted to buy instead, brokers said, because interest rates were at historic lows. Now, with higher rates – and a lot of hype about a slowing Manhattan sales market – renting might look more appealing.