Well Before Summer, Hamptons Luxury Real Estate Is Scorching
Coopers Beach in Southampton is considered one of the most desirable places in the country to spend the summer.
The emerald hedgerows that are a natural euphemism for Hamptons exclusivity (out here, good hedges, not good fences, make for felicitous neighbors) are hanging tight.
Most of the double-decker dunes that define the East End’s ocean coastline are hanging tight, too. That unfortunately can’t be said for patches of Long Island, Fire Island, New Jersey and Connecticut, where the extraordinary weather events of autumn 2012 transformed undulating beaches and waterfront homes to sodden pancakes. On the South Fork of Long Island, where the array of villages and hamlets includes Southampton, Bridgehampton, Sag Harbor and Montauk, agents and town officials say only one home, owned by the Lauder family and precariously perched at water’s edge in Wainscott, drowned in the maelstrom created by Hurricane Sandy. But erosion is a perennial enemy, and efforts to rebuff it, continual.
Otherwise, it’s back to business bolstering the bulkheads and merchandising the seductive strata of housing stock (from darling shingled cottages to resorts-masquerading-as-mansions), with brokers forecasting yet another pricey summer season. “Nobody really suffers from Hamptons sticker shock anymore,” said Judi Desiderio, the founder of Town and Country Real Estate.
Harald Grant, a senior vice president of Sotheby’s International Realty, has already rented out an oceanfront house in Southampton for $550,000 for the month of August alone and has a stack of 14 contracts and purchase memos on his desk representing pending sales of $4.5 million to $25 million. Not to worry: the most expensive oceanfront property in the Hamptons, on East Hampton’s Lily Pond Lane and co-listed by Tim Davis of the Corcoran Group and Diane Saatchi of Saunders & Associates, is still available for $40 million.
For high-rolling renters, Mr. Grant has a trio of oceanfront rentals in Southampton that can be had for the summer for $400,000, $600,000 or $800,000. Why pay $25 million to buy, and more to maintain, a summer getaway when you can rent and run? Or, for a million or so, you can rent year round.
“But in general what’s different this season,” Mr. Grant said, “is that in the mind of most buyers, less is more, and nobody wants to be the king of the hill and flaunt their wealth the way people were doing before the recession.
“Folks who spent $20,000 for a month’s rental,” he continued, “may be looking to spend $15,000. Folks who could be driving a Rolls-Royce are settling for a Mercedes. People aren’t saying, ‘I have to have it; I’ll pay anything,’ and writing checks on the spot. An owner who says, ‘I want $32 million for my oceanfront house’ probably isn’t going to get it. He’ll get somewhere in the mid-20s.”
But only if the house has a pool, a tennis court and central air-conditioning; just being oceanfront isn’t enough anymore.
Still, abundant deals are to be had for perceptive buyers who don’t require fur vaults, wine caves or home theaters.
“I just sold a wonderful house for $2.9 million in Southampton Village,” Mr. Grant said. “Five bedrooms, five bathrooms and a pool on half an acre. My clients would have liked a tennis court, but instead of spending $5 million, they scaled back a bit and they’re happy and comfortable with that decision.”
Mr. Davis, of Corcoran, found a $1.75 million mini-estate on 1.7 acres near Little Peconic Bay in Southampton for Barry LePatner, a Manhattan lawyer, and his wife, Marla Tomazin, an image consultant, after they told him they were looking for a private spot with year-round proximity to the city and great curb appeal. “We wanted to find a house that made us happy and excited to see it every time we pulled into the driveway,” Mr. LePatner said.
It wasn’t an easy search, until Mr. Davis remembered a house he had listed a few years back at what he thought was an exorbitant price. It hadn’t sold, and he no longer had the listing. But when he approached the owners, who were eager to retire to Florida, they were open to an offer.
“We loved the house the minute we saw it,” Mr. LePatner said. “It had great trees, a great big garden, a pool, and I never imagined I’d be able to buy a second home with a tennis court.” (He plays.)
“The icing on the cake,” he continued, “was that we got a 15-year fixed mortgage at 2.8 percent, and on Jan. 9 we closed. The timing was just right — maybe if you bought out here in 2006 you made a big mistake and paid too much, but Tim assured us there was no way we’d lose out buying at this price in a rising market.”
In a departure from years past, Ms. Desiderio said, 6 of the 10 most expensive Hamptons homes to sell in 2012 were inland. There, the pastoral and pristine prevailed. But for a few extra leaves in the swimming pool, the landlocked housing stock survived the meteorological dramas of last fall mostly unscathed.
And prices are in fine fettle, same as those trademark hedges. Quarterly reports indicate that they are not only intact, but even embarking on a growth spurt. Properties under $1.4 million in turnkey condition are, said Caroline Sarraf of Brown Harris Stevens, “flying off the shelves, especially if they’re within walking distance of the villages. Younger buyers all want something that’s ‘done’ and doesn’t need any work.
“Waterfront properties,” she continued, “are always sought-after, but it’s probably safe to say that waterfront with elevation is becoming more important. Maybe that’s the new value that’s priceless.”
An oceanfront house with a pool and a tennis court on coveted Meadow Lane in Southampton is on the market for $28.5 million. [Tim Davis, Web ID 34794]
Steve Cohen and his partner recently traded $1.275 million for a colonial-style walk-to-village house in East Hampton.
There is even opportunity for water-lovers who aren’t billionaires. The oceanfront sales listings at the Corcoran Group start at $249,000 (a co-op in Westhampton).
“Prices have not gone down in the first two months of this year,” said Ernest Cervi, an executive managing director of Corcoran, “and the median price of our rentals actually increased 21 percent over this same time last year.”
This being the Hamptons, and the clientele being a tad demanding, properties that aren’t technically in the supply chain are also in play. “People are always looking to buy things that aren’t available,” Mr. Cervi said. “I just reviewed the paperwork on the sale of a waterfront home in Water Mill that hadn’t even been listed for sale. But when somebody wants to give you $11.5 million in the middle of the winter, sometimes you listen.”
According to John Gicking, a vice president and brokerage manager of Sotheby’s East Hampton office, “The luxury property sales, which to us means $10 million and over, went up 60 percent in the last year, and we’re also seeing a lot of private sales, where we’re asked to market properties quietly and make discreet inquiries.
“Of the top 20 sales,” he said, “all properties costing $15 million or more, Sotheby’s participated in 11 sales and privately brokered 4 that totaled $79 million.
“Value was the word of the year for 2012,” Mr. Gicking added. “The smart money watched and waited patiently for a correctly priced home, and among prime properties in the most desirable areas, we’ve seen bidding wars continuing into 2013, a clear indicator that, after a few turbulent years, buyers are confident about jumping back into the Hamptons market again.”
Throwbacks to giddier seasons, bidding wars have erupted on both the rental and sales fronts. In East Hampton Village, a regal oldie priced at $24.5 million sold for $25.75 million, no water views included, unless one counts the pool. In Montauk, a $35,000 summer rental inspired a bidding war among clients of Rosehip Partners that was ultimately resolved at $38,500.
“Montauk is scorching hot, already 95 percent rented,” said James Young, a principal of Rosehip, a brokerage that also operates HamptonsRentals.com, which offers season-long rentals ranging from $17,000 to $95,000. Last summer, Rosehip set a company record with a $375,000 oceanfront Montauk rental.
Paul Brennan, of Douglas Elliman Real Estate’s Bridgehampton office, agreed that Montauk is the cutting-edge destination of an increasingly wealthy, and youthful, subset of Hamptons habitués. “We’ve already done 10 Montauk deals from this office,” he said, “because people are coming out, looking around, and migrating out there because they see it as the last bastion of the way it was in the old days before everything was gentrified and Ralph Lauren-ed out. Montauk is definitely percolating. Luckily for folks who like it the way it is, the land is 70 percent reserve.”
So it won’t become a second Sagaponack, the no-man’s-land of potato fields that morphed into an elite pumpkin patch of hedge-fund managers’ McMansions.
“I can count 10 spec houses priced at $15 million or more sitting there waiting to be sold,” Mr. Brennan said of Sagaponack, which also has the region’s most expensive non-oceanfront property: a 33-acre estate on Sagg Pond that belongs to Robert Hurst, a former Goldman Sachs executive. It went on the market in June and at last glance was still asking $65 million.
“When I started out in this business three decades ago,” Ms. Desiderio said, “you couldn’t give the dirt away in Sagaponack south. It was flat, barren land, not one green twig. Now it’s a lushly landscaped, beautiful area, but it’s an area where prices inexcusably doubled between 2005 and 2007, loaded up with Bear Stearns and Lehman dice. Then the bottom fell out.”
Christopher Peluso, a developer who has built houses on speculation in the $8 million to $12 million bracket in Water Mill, Southampton and Bridgehampton, has carved out his own niche in the marketplace by offering fully furnished properties. “Everything that gets built out here sells eventually,” he said, adding that buyers are sophisticated and quick to spot flaws.
For Marla Tomazin and Barry LePatner, a house in Southampton with a pool and a tennis court was love at first sight. They closed on the 1.7-acre property late last year, paying $1.75 million.
“These trophy properties are a personal statement for them,” he said, “but one thing they all want, even with a traditional shingled exterior, is modern amenities. They don’t want to feel like they’re at their grandmother’s beach house. They want bright, modern and airy. They want the space to flow for entertaining. They want every bedroom to have an en-suite bath. Shared bathrooms have gone the way of the dodo-bird; no one shares a bathroom in the Hamptons unless they’re under the age of 3. Amenities that used to be considered upgrades, now everybody wants them.”
The record price for a house remains the $60 million paid in 2008 for 108 Gin Lane in Southampton, but not every buyer operates on an elastic budget.
Back on less rarefied ground, Ms. Desiderio said, most transactions in 2012 occurred in the $500,000-to-$999,000 range, where shared baths occasionally apply. “There were 542 recorded sales, more than any other price category.”
Still, median home prices in Amagansett, another spot where 2013 summer rentals are already scarce, rose 22 percent to $1.8 million last year. And East Hampton Village raised the bar in every category. It accounted for 6 of the 10 most expensive sales, had an average sale price of $3 million, and was home to 10 of the 33 sales recorded in the $10 million-and-over range. It exudes the quintessence of desirability. So snagging a deal in or near the village can be cause for euphoria.
Steve Cohen and his partner, who share an Upper West Side apartment with their 2-year-old daughter and a dog, had convinced themselves they wanted a charming century-old Hamptons fixer-upper. But after spending most of last year looking for the right place at the right price — $1.5 million or less — they wound up buying a 1986 colonial on the fringes of East Hampton Village that they had seen and rejected at the beginning of their search.
“When we first saw this home we were in and out in like two minutes,” acknowledged Mr. Cohen, a broker with the Corcoran Group in New York City. “It was yellow, it was blah, wasn’t an antique, wasn’t for us.
“But,” he continued, “after a year of being educated as to what else was out there, we realized we’d totally misjudged it: here was a house with great bones in a great neighborhood within walking distance of the playground and the village, and almost unbelievably, the price had been reduced. It’s like it was waiting for us; it was meant to be.”
They paid $1.275 million, closed on Dec. 24, and are in the midst of renovations. “We feel like we got in before the market took off again,” Mr. Cohen said.
They have a good excuse for feeling that way: in early March, they received a call from their home’s listing broker, Ms. Saatchi of Saunders & Associates. She had received an offer on their house for considerably more than they had paid, and asked if they were interested in selling. Negative. They’re busy moving in and making it their own.
“For years,” Ms. Saatchi said, “time was on the buyers’ side. They would look and look and from one visit to the next, prices would go down and inventory up. Now, waiting is starting to mean higher prices and fewer choices. As in the city, we’re running out of prime inventory.”
As for the perpetually picturesque waterfront, buyers with $20 million to spend are showing no post-Sandy qualms about securing the totemic Hamptons trophy: a south-of-the-highway oceanfront estate with all the trimmings of a five-star resort. But the Montauk Highway is losing its traditional role as the great divider. Alec Baldwin and Paul McCartney could live anywhere in Amagansett, said Arlene Reckson, a broker with Corcoran’s Amagansett office, but both settled north of the highway. “The action is brisk right now on both sides of the highway,” she said. “People want to buy now and be in for the summer. This quarter is a barometer for the way the rest of the year is going to go.”
The next time the sales market heats up, she predicted, will be at summer’s end: “It will happen in September, when nobody wants to leave.”
Go Find Your Flippers
The real estate, and dunes, on Fire Island qualified for a post-mortem in the wake of Hurricane Sandy. Besides the dozen or so homes swept into the sea, nearly 1,600 sustained significant damage — by wind or saltwater or a combination. The Army Corps of Engineers, which so far has five demolition permits for homes too ravaged to repair, is handling the removal of tons of debris.
“There are no dunes on Fire Island, none,” said James Mallott, the mayor of Ocean Beach Village, at a meeting for Fire Island homeowners in Manhattan in November. An official from the Town of Brookhaven confirmed that roughly 15 homes on its tax rolls had been destroyed and 150 severely damaged.
It was estimated that 8 out of 10 oceanfront homes on the barrier island were affected. If the Army Corps proceeds with a controversial plan to rebuild the dune line slightly north of the previous line, some oceanfront houses may have to be torn down.
Mayor Robert Cox of Saltaire said his village had already repaired docks and bolstered the oceanside dunes to prevent further damage, and expected to be ready for summer; he added that Saltaire opposed any relocation of the dune line even though it would affect just one home there.
Agents said the storm had a minor impact on rentals: “Probably 75 percent of our rentals for the following season are completed in August,” said Jon Wilner, the owner of Properties of the Pines. “Sales are good and rentals are strong. The Pines was not badly hit. The worst of it, I think, was one oceanfront home that lost its pool and deck. To lose a dozen or so houses to the ocean on an island with miles of oceanfront is traumatic, yes, but certainly not catastrophic.”
An infusion of sand and money is coming to the Hamptons, which also expect displaced vacationers from the Jersey Shore, Connecticut and elsewhere. The Town of East Hampton requested an additional $20 million in federal funds to replenish Montauk beaches, and the Town of Southampton earmarked $24 million for beach restoration. It is crucial, said East Hampton’s town supervisor, William J. Wilkinson, that the beaches be ready. “This year more than any other,” he said, “the beaches in Montauk are everything to the economic engine not only of the hamlet of Montauk, but the entire town.”
Copyright © 2013 The New York Times Company. Reprinted with Permission. Kirsten Luce/The New York Times.