First Quarter Was Rosy for Some
Carissa Katz
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(04/29/2010) Considering that 2009 was one of the most dismal years on record for real estate on the East End, first-quarter reports touting extreme increases may not be terribly surprising.
“The Hamptons is always going to be the Hamptons,” said Dottie Herman, the chief operating officer at Prudential Douglas Elliman in Manhattan. “It’s a second-home market,” she said, and “the standoff is over.”
“It’s come to a place where it has leveled off. The sellers are more reasonable, the buyers are not worried about it going down any further, and all the stars are aligning,” she said.
According to a report released by the National Association of Realtors last month, vacation-home sales were up almost 8 percent in 2009, although that was “from very low levels in 2008.”
“I think a year ago, the common refrain was, conspicuous consumption is over,” said Jonathan Miller, an analyst who compiles market reports for Prudential. “I think that sentiment is changing,” he said, “and it’s born out of simple economics. The affordability has improved significantly.”
From a peak in the second quarter of 2007 and a low in the first quarter of 2009, the median sales price on the East End dropped 33 percent, he said. It has since risen 14 percent.
George Simpson is the president of Suffolk Research Services, a real estate data company in Southampton. His quarterly report listed the number of home sales in East Hampton Town at 150 for the first quarter of 2010, about the same as for that period in 2006 and 2007.
The median price was higher, however — $1.15 million in 2010 and $850,000 in 2006. Last year, during the first-quarter slump, Mr. Simpson recorded only 55 sales in East Hampton Town.
“It’s basically an Internet-driven market,” said Mr. Simpson. “The market has become, in my opinion, a two-company market: Prudential and Corcoran.” Their power lies primarily in their ability to advertise and their sophisticated Web sites, he said.
Prudential and Corcoran are also among the first to release quarterly reports. Smaller companies tend to release theirs later, or not at all. Town and Country Real Estate, an independent agency, is an exception: Judi Desiderio’s market reports are always early.
According to her research, home sales on Shelter Island jumped from 1 to 14, or 1,300 percent, over last year’s first quarter, and the total home sales volume there skyrocketed 1,442 percent.
“The big boomers I think were really Shelter Island and Montauk,” she said, because “those were the ones that were really hit the hardest” last year.
Mr. Miller reported the most significant increase in the luxury market, or the top 10 percent of all sales. There, the median price jumped more than 34 percent, to $5.5 million, over that during the first quarter of 2009.
“Housing prices are essentially flat,” he said. “We’ve just seen a significant skew in the first quarter because of more high-end sales.”
Those sales, he added, are typically cash transactions — another anomaly that distinguishes the “Hamptons” market here from most of the rest of the world.
“A lot of them don’t finance, and when they do, they finance with the institution that has most of their assets — if they’re a J.P. Morgan client, they’re going through them,” said Kevin Santacroce, Bridgehampton National Bank’s chief lending officer.
It is tougher to get a loan these days, which Mr. Santacroce said he viewed as a good thing. Even so, he has seen a surge of lending activity for clients with good credit.
“The fact of the matter is, there are less players in the game than there were even six months ago,” he said, noting that lending companies such as American Home Mortgage, Countrywide, Evergreen Mortgage, and Washington Mutual have now vanished.
When it comes to getting a loan, “the public perception has changed,” Mr. Santacroce said. On the East End, he said, lending practices and credit have less bearing on real estate transactions than in other areas of the country.
“We’re so close to the financial community in New York,” said John Keeshan, who has had a small real estate office in Montauk for nearly four decades. “The stock markets are doing well, the brokers that run the show are doing well, and I think they’re a little frustrated and a little impatient,” he said. “Everyone’s tired of this recession.”
Mr. Keeshan maintained that Montauk is the trendiest spot to buy real estate on the South Fork, particularly with the emergence of Ditch Plain as “the center of the East Coast universe in terms of surfing.”
“The people we’re seeing are young entrepreneurial types who are not all just products of Wall Street, but who have for one reason or another been fortunate enough in their own businesses,” he said.
In Corcoran’s Montauk report, the number of sales in the hamlet rose 44 percent, from 16 to 23, in the first quarter of 2010. Ms. Desiderio’s, which does not include condominium sales, reflected a 180-percent increase, from 5 to 14.
In response to Mr. Simpson’s claim that the big players are hogging all of the sales, both Ms. Desiderio and Mr. Keeshan said that the agents who are working the hardest are making the sales, regardless of what company they work for.
“It doesn’t matter whether you’re Corcoran, you’re Prudential, or you’re Keeshan,” Mr. Keeshan said. “You’re only as good as your next sale.”