Hamptons Is Cooling

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The New York Sun

It was inevitable, some housing industry watchers say: After a five-year period during which the value of many homes in the Hamptons ballooned anywhere from 30% to more than 120%, economic reality seems to be catching up with New York’s most prestigious summer playground for the rich, the famous, the infamous, the up-and-coming, and the wanna-bes.

Indicative of this are the reports from Hamptons residents and local real estate brokers that the number of available houses is ballooning. Some, in fact, say there are more for-sale signs in the Hamptons than they’ve seen in years.

“I’ve never seen so many houses on the market since we’ve been here,”says Marcia Wolf, who, with her husband, Norman, president of New York women’s sportswear producer Carole Wren Corporation, has owned a beach home in Westhampton since 1979. “We see a lot of homes for sale and never did they seem to sit so long,” Mr. Wolf says. He finds this to be the case especially for homes that sport price tags in the $1 million to $3 million range.”The buyers seem much more cautious,” he says.

Normally, such a trend is a guaranteed fore-runner of price weakness, which, I’m told, the Hamptons real estate market hasn’t experienced since the crash of the Internet and technology stocks in the early 2000s.

Clearly, the hot Hamptons market of recent years is cooling, with a conspicuous absence of buyers, increasing buyer resistance to inflated asking prices, a marked slowdown in the sales pace, and an increase in the amount of time required to cement transactions.

One leading real estate broker in the Hamptons, Diana Saatchi, a Corcoran Group senior vice president, takes note of the growing number of available residences. She estimates listings, including both existing houses and new homes built on speculation, are up about 10% to 20% from a year ago,with the most sluggishness in the $1.5 million to $5 million range. “We haven’t seen any price weakness yet, but it might well happen,” she says.

Actually, to some degree it is already occurring, according to the experiences of accountant Edward Meagher, who, along with his wife, Judy, and their basset hound, Beaver, have been eagerly combing the Hamptons for their vacation paradise on and off for nearly three years. Nothing, it seemed, pleased them in their desired price range, even though the Meaghers had reluctantly raised their maximum purchase price to $1.5 million from the $850,000 they originally had said was all they would spend.

The Meaghers did make a couple of what they considered lowball bids on two houses, both of which were immediately rejected – one in Southampton at $1.1 million (the asking price was $1.65 million) and another in East Hampton at $995,000 (the asking price was $1.59 million). In the past 10 days, though, Mr. Meagher says he received calls from the brokers representing the two sellers, both of whom told him the owners were now willing to renegotiate at a somewhat higher price than he offered and inviting him to raise his bid.

“I’m not going to do it,” he says, “because the asking prices are way too excessive.” He contends that is the case with most homes on the market in the Hamptons. Even the brokers will privately tell you so, he says. Most sellers, he argues, have their heads in the clouds, ignoring such real-world realities as rising mortgage rates, the fact the stock market is no longer appreciating every single day, and that not every buyer works on Wall Street and gets a $10 million bonus each year.

A growing number of listings would normally suggest a relatively strong rental market, and that’s said to be the case now in the Hamptons. In fact, it’s the best in five years. Ms. Saatchi estimates rentals – both in volume and price – are up about 5% to 10% from year-ago levels. She ascribes this lively tempo to last year’s hefty Wall Street bonuses, as well as to higher mortgage rates, which, she says, are encouraging more people to rent rather than buy.

Despite the buildup in inventories, Ms. Saatchi maintains prices are holding up well, with the average sale price up roughly 10% from last year. She says the most robust interest centers on the lower-priced homes, notably those under $1 million. If they’re priced right, they go very fast, she says. Homes for the rich folks, those at more than $5 million, are also said to be doing quite well.

Why the weakness in the $1.5 million to $5 million range? Ms. Saatchi points out that it is a key pricing area for new construction, and it’s hard for resales to compete with new homes. Likewise, she adds, buyers in this range are much more cognizant of rising mortgage rates.

Although some disagree with her characterization, her bottom line is: “We’re still in a sellers’ market and not yet in a buyers’ market.”

Speaking of sellers, if you’ve got an especially fat wallet, you might want to contact a former Warnaco Group CEO, Linda Wachner, who has yet to sell her Southampton house, a six-room, 8,500-square-foot residence with an adjacent eight-acre vacant lot. She’s asking $62.5 million. It has been on the market since March, so Ms. Wachner, who could not be reached for comment, might just go for a lower price.


The New York Sun

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