UPDATED September 4, 10:50 p.m. When a seven-bedroom waterfront mansion in Water Mill was listed three years ago, its sellers expected to quickly find a buyer willing to shell out an asking price of $24.75 million.
But anyone watching the market knows how this story goes. It took a lot of patience and a price reduction down to $14.5 million to sell the home at 64 Holly Lane, said Sotheby’s International Realty agent Beate Moore, who had the listing. That lower list price yielded a bidding war, sending its final sale over the ask, though Moore declined to specify by how much. She described a similar situation regarding an 1880 estate at 544 Hedges Lane in Sagaponack, which she recently sold for $14.5 million after it was listed for $22.5 million in 2015 and then for $16 million in 2017.
RELATED:
— Staging versus Showcasing in the Hamptons
— The top luxury brokers in the Hamptons
— What’s new in the Hamptons this season
This is the recurring theme for luxury listings in the Hamptons this year, Moore said. With inventory piling up, buyers are waiting in the wings for deals to pop up, and sellers have to be realistic about the prices that will lure them out.
“For somebody who has the expectancy of selling a house within seven months and it doesn’t happen, it always comes down to the number,” Moore said.
Indeed, if the Hamptons residential market is defined by any one thing right now, it is the massive number of homes on the market.
In 2019’s second quarter, there were 2,557 properties listed on the South Fork — up more than 84 percent from last year at the same time, according to the latest market report from appraisal firm Miller Samuel. And the number of listed luxury homes — defined as the top 10 percent of the market — was up a stunning 90 percent year-over-year.
“There was clearly more inventory than buyers,” said Saunders & Associates broker Diane Saatchi, who added that the oversupply has been building for years. Many sellers expected the market to pick up after the 2016 presidential election and priced properties accordingly. But the Trump administration has yielded unforeseen tax changes and political turmoil, which have made buyers cagier about their cash, Saatchi said.
“The only thing [brokers] can do when there’s more supply than demand is encourage sellers to lower their prices, and in many cases, that’s happened,” she said.
Even celebrity properties are getting passed over if the price isn’t right. Christie Brinkley’s historic Sag Harbor mansion, for example, took nearly a decade and $8 million in price cuts before it finally sold in February for $17 million. And the coveted Wainscott estate dubbed Kilkare — known for its appearance in the 2004 Academy Award-winning movie “The Eternal Sunshine of the Spotless Mind” — has been available since 2017 and last year it received a $10 million price cut to $45 million.
Changing tastes
Being realistic about prices is especially important for older homes like Kilkare, which would need renovations to be brought up to today’s standards of living, said Moore, who represents the historic mansion. Buyers want amenities like en-suite baths for every bedroom and modern soundproofing already included if they’re going to shell out big bucks for a property, she said.
“It’s an iconic property, it’s beautiful and everybody loves it and it’s in a great location,” Moore said of Kilkare, which she once represented (It’s currently being marketed by Bespoke Real Estate). “But the house for today’s standards is not what people are looking for. It doesn’t have all the bells and whistles.”
The Corcoran Group’s Tim Davis landed one of 2019’s biggest residential deals when he sold a Southampton home for $32.5 million in June. But the house was only about 10 years old and was maintained in its original mint condition.
And that, Davis said, is what buyers want now — not a fixer-upper, no matter how beautiful.
“These wonderful historic mansions from the late 1800s or 1920s, with grand rooms and large spaces, most of them were renovated 10 to 20 years ago and people still need to spend millions of dollars to update them to how they live today,” Davis said. “In many cases, it can take years for a seller to finally realize that this amazing home that they think is worth X is really not worth anywhere near that.”
Brand-new spec houses aren’t faring much better, said Bill Locantro of the Long Island-based firm Paramount Custom Homes, which is developing 28 private luxury homes on 35 acres in Southampton called The Fields. Prices range from $3.250 to $3.495 million and five have sold so far, three in 2018 and two this year.
“They’re selling well because of the level of the construction compared to the competition for the price point,” noted The Fields listing agent, Vince Horcasitas, of Saunders.
But Locantro’s project is an outlier. He said that due to the slowdown in sales, most developers have stopped buying vacant land in the Hamptons for now, and in the meantime, they are building homes for private clients while trying to sell the spec houses they have remaining on their rosters.
One of the biggest problems facing his bottom line is the luxury rental market.
“Why own the property if you can rent it for the month of August, and then you don’t have to bother with the other 10 or 11 months?” Locantro said of the potential buyer’s thought process. “The older people are putting their houses on the market, but young people would rather Airbnb all over the world.”
Looking forward, however, broker Judy Desiderio of Town & Country said there’s no reason to panic, and that upcoming data will reflect stronger sales from the summer.
“Market reports are a look in the rearview mirror,” she said. “Activity is picking up, and it’s not as bad as it was last quarter.”
Editor note: This article has been updated to reflect that the Kilkare property is now represented by Bespoke Real Estate.