Few real estate markets got hit harder by the recession than the Hamptons, Long Island's summer playground for the rich and famous.
After all, the people who live in East Hampton estates and Southampton mansions had been the prime beneficiaries of robust Wall Street profits.
"I told my wife to check and see if the phones were still working last winter," joked Alan Schnurman, a high-end real estate developer. "Everything just stopped. There were no inquiries, no bids."
But starting in the spring and accelerating throughout the summer, the real estate market on eastern Long Island has seen a solid rally. Third-quarter sales could triple from six months ago, though prices are down from their peak.
"These buyers are smart people and they all made a decision that the market hit a point and was forming a bottom," Schnurman said. "Now, they want to get in on the values that are out there."
Schnurman recently had five parties bidding on a 2.3-acre lot at his development called Sagaponack Greens, a former potato field only a few hundred yards from the ocean. After a two-week battle, the winning bidder plunked down $5 million for the land; millions more will be needed to actually build a house.
"Now the phone hasn't stopped ringing," Schnurman said.
Ann Rasmussen, an agent in Devlin McNiff's East Hampton office, said she believes the resurgence happened because the stock market has improved.
"So many people have cash that they took out of the stock market and want to put it into property, an investment that they can use and enjoy," she said.
Since Memorial Day, a 1903 East Hampton estate once owned by actress Elizabeth Montgomery was on the market for only two weeks before a $22.5 million offer was accepted. On the other end of the spectrum, a one-bedroom co-op in Amagansett sold for $255,000, Rasmussen said.
Bridgehampton agent Andrew Saunders noted there were only 104 first-quarter real estate transactions for the territory from Southampton to Montauk. That picked up to 142 in the second quarter. From June 19 to Aug. 19, there were 236 homes that either closed or were in contract.
Saunders predicts that by the end of the third quarter on Sept. 30, there could be 350 deals from Southampton to Montauk. That would nearly equal the number of sales for the entire tip of Long Island — a larger region that includes both the Hamptons and the island's north fork — in the third quarter of last year, according to a survey released by Prudential Douglas Elliman Real Estate.
Sellers have had to lower prices to accommodate cautious buyers, Saunders conceded. In the Hamptons, that means cutting the asking price from, say, $10 million to $7.5 million or $8 million.
"It's not like 2005 or 2006 when houses were selling in spite of themselves," Saunders said. "But if a broker is creative and skillful, there is a real willingness by buyers to step up and make a deal."
Gary DePersia, senior vice president of the Corcoran Group, said this is more than just overly enthusiastic sales chatter. The market still favors buyers, because there is a high inventory of homes for sale and mortgage rates are low, he said.
"We're seeing people, I think, realizing they don't know where the bottom of the market is, but thinking maybe now is the time to step in," he said. "I know there are still experts out there saying things are going to get much worse. But this has been one of the busiest times in the Hamptons. Interest is at a fever pitch."
Jonathon Miller, a real estate appraiser and consultant, attributes some of the sales boost to the long slump that preceded it. "A large part is a release of pent-up demand," he said. "We're sort of playing catch-up."
He also differed with those who suggested the real estate market had hit its bottom.
"It's pretty hard to call a bottom when the economy hasn't stabilized," he said. "In many ways New York was the last into the recession and likely will be the last out," adding the recent rally "has to be taken with a grain of salt."
Still, Schnurman and others think the worst might be over.
"There's no question there's renewed confidence in the market," he said. "The best locations always come back first."