The Hamptons have always been known as the playground for the rich and famous. But how has the East End of Long Island fared during the national housing slowdown? Early last month, about 80 homes were reportedly in various stages of foreclosure in East Hampton and Southampton, even a $15 million home in East Hampton.
Meanwhile, the summer rental market got off to an early, strong start in 2008. A three-month summer rental in Sagaponack hit the market earlier this year with an asking price of $1 million; many homes in the $300,000 to $400,000 range were already leased out by early January.
In a recent Webcast interview, The Real Deal’s Jen Benepe sat down with Rick Hoffman, regional senior vice president at the Corcoran Group. Hoffman shared his thoughts on the recent uptick in foreclosure activity in the Hamptons and talked about how the 2008 rental season is shaping up.
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The Real Deal: A RealtyTrac search of foreclosures and lis pendens found several major properties in Southampton that are in foreclosure. What’s happening? Is that part of a trend?
Rick Hoffman: I don’t see that as a trend at all. In fact, I think if you look back, historically, there is probably always something that shows up as a lis pendens in the high-end in Southampton and in East Hampton … but I don’t think you’ll ever see any one of these properties being auctioned on the courthouse steps.
TRD: Let’s talk about some trends, because some in the media have said that there is a sudden upward trend. Did you see that in the numbers that you documented?
RH: Maybe slightly in the lower end of the market. And those markets that you’ll find out east are the Hampton Bays, Flanders and East Quogue markets; the Noyack and North Sea markets in Southampton; and maybe the Springs market in East Hampton, up through the Springs. These are typically houses priced below $1 million, and they are typically primary residences.
TRD: A new report in the Southampton Press had some very interesting numbers. It said that while overall home sales were down 10 percent from last year, the market for homes over $4 million was very robust. In fact, the median price has continued to go up, and the total value of transactions has gone up. This is usually an indication of an expanding market; what’s going on there?
RH: That’s true. This has been happening for a couple of years out east. What we’re seeing is the actual number of properties transferred did go down by a percentage point. In real estate, it’s very difficult to talk about markets because as they say in that old adage, it’s location, location, location — well, very much so when you’re talking about the market itself. Even on the East End, it’s very location-specific.
TRD: Which price range of homes has fallen off the most?
RH: They’ve always reported that it’s the $1 million to maybe $3.5 million range, which is where you see a lag in the market. But that’s our biggest inventory on the East End if you look at overall inventory, so that’s the most affected. That’s also where a property owner, if they don’t properly price their home, it’s going to sit on the market longer because it’s competing with the most like product.
TRD: Any noteworthy change in the median home price?
RH: The median home price continues to go up on the East End. We’ve seen median home prices go up from 8 to 13 percent each year over the course of the last three years, so that also is an indicator that inventory is not stagnating on the market, because demand is still there.
TRD: Media reports have said rentals are surprisingly, given the current economic uncertainty, flying out the door and prices are up; is that happening?
RH: Rentals are great this year. More than 50 percent of our Amagansett rentals were gone as of about three weeks ago. And when I say our rentals, it’s not just us; most of the companies share rental listings. I haven’t seen rental prices go up significantly this year. I think with the strength of this year’s market, we may see rental prices go up a little next year. What everyone likes to talk about is, they say, “Well, if rentals are so strong this year, this must mean sales are going to go down.” But we’re not seeing that happening in the Hamptons. We’re seeing incredible sales on the high end — we represented the $103 million sale. We would have had the record in the United States, but we were beat slightly at the end of the year.
TRD: Where was that?
RH: In East Hampton.