The good news is there are bargains to be had in the Hamptons real estate market. The bad news as Memorial Day beckons, is you will still need deep pockets, aka millions, to get in the game.
Eastern Long Island’s summer destination for the ultra-rich and famous has not been immune to the worst recession since the end of World War II, brought on by a nationwide collapse in the housing sector and the collateral damage throughout the banking industry.
But brokers and developers in the confederation of villages and hamlets stretching 40 miles along eastern Long Island’s south shore contend that after a financially disastrous winter, Wall Street’s recent stock market rally has inspired optimism.
“Right now, it’s as if somebody opened a spigot,” says Manhattan attorney and Hamptons developer Alan Schnurman. “Everybody is out shopping and the game is how low can they (prices) go.”
Gary DePersia, senior vice president of the Corcoran Group — a major Hamptons real estate player — said his office has seen significant activity in the past two months, but noted asking prices are down. Bargains of 30 or 40 percent off are not unusual, he said.
“At the height of the market in 2007, a house may have been selling for $12 million,” said DePersia. “By the end of 2008 ... there may have been some intermediate price drops on that house to maybe $10 million and it eventually sold in the mid-eights.”
DePersia says many factors have aligned for bargain-hunters looking for a vacation home, which is the typical Hamptons shopper. “We have increased inventory, lower prices and sellers who are more negotiable, and cheap interest rates,” he said.
A survey by Prudential Douglas Elliman released last month found that the median sales price for a home in the Hamptons fell almost 24 percent to $675,000 from the same time a year ago. The number of actual homes sold plummeted by almost 54 percent.
“The good times rolled for so long that everybody who had money bought,” said author Steven Gaines, a Hamptons real estate aficionado who hosts a radio program on Hamptons culture every Sunday from the lobby of the American Hotel in Sag Harbor.
He said many who bought in the Hamptons in the past few years are now taking a wait-and-see approach to the market, although there have been some victims of Bernard Madoff’s Ponzi scheme who have had to sell. He declined to name specific victims, noting many are sensitive about publicity.
Generally, though, Gaines said few people are hurting economically, relative to the rest of the country. “When you reach a certain amount of wealth, like a lot of people in the Hamptons have, you’re only half as rich as you were,” he said.
Gaines, whose 1998 “Philistines at the Hedgerow: Passion and Property in the Hamptons,” is still popular in Long Island bookstores, noted that many of what he called “wannabe Hamptonites” who bought homes in the $1 million range have been forced to sell, but he didn’t consider that such a bad thing.
“I think that flushing of people who really couldn’t afford to be here is actually a good thing,” he said over coffee in a Bridgehampton luncheonette. “I think it keeps the elitism going, which is important to the community, because the community’s accessibility and its ubiquitousness hurt the Hamptons.”
Andrew Saunders, a longtime real estate agent who opened Saunders & Associates in Bridgehampton during the depths of last fall’s economic collapse, agreed that as the stock market has rallied through the spring — the Dow is up more than 1,600 points since its low in March — activity is on the rise.
“Buyers are out in significant numbers and renters are out in significant numbers,” he said.
A summer rental can cost more than a house in many parts of the country. The fabled Grey Gardens estate, which is across the street from Steven Spielberg’s compound in East Hampton, for example, is available for $200,000 for the month of July.
Saunders, however, observed that many confronting possible economic hardship are laying low.
“Despite all the problems, we haven’t seen the ‘Bear Stearns houses’ or the ‘Merrill Lynch houses’ come on the market for sale,” he said. “One here or there, but we haven’t seen dozens of them come on the market, and there are dozens and dozens of those guys out here.”
Saunders said he’s also noticed a reluctance among Hamptonites to flaunt their wealth — a trait that had been synonymous with the resort communities for a long time.
“There is sort of an inappropriateness to buying that really big fancy thing, even if you can afford it,” he said. “I mean there are plenty of people in the Hamptons who luckily were not terribly impacted by what happened and can continue to buy very fancy things, but they’re not.”
Gaines noted that at the nearby Bridgehampton Motor Club — a high-class garage where the elite store their Benzes, BMWs and Ferraris — many of the vehicles have not been taken out of storage for the summer.
“All the Bentleys, all the classic cars are staying in; the guys are going to drive their wives’ Priuses,” he said. “There’s a certain element of shame and embarrassment now. They’re afraid their neighbors are going to think their bonuses were too big, or they were part of that.”