REAL ESTATE

INSIDE STORIES BEHIND AREA REAL ESTATE DEALS

Luxurious Green
Green was the operative word at this summer's HC&G Idea House in Sagaponack from developer ModernGreenHome. The house, listed by Sotheby's broker Ryan Jacka, is now available for purchase (631) 537-6000.

Manhattan's upper east side will soon include nine unique, boutique, green three- and four-bedroom homes at 180 East 93rd Street. Developed by Greystone Property Development and designed by Barry Rice Architects, these residences are another demonstration of how luxurious living can also be eco-friendly.

Local and sustainable materials are being used for a healthy and earth-conscious way of living. A geothermal well will feed the primary heating and cooling system. Digging into Manhattan granite is a singular achievement! Warburg Realty's Richard Steinberg has the listing (212-439-5183 or www.180e93.com).

Will the Fat Lady Sing this Fall?
We could be facing a taunting finale to a season of buy, sell or hold—as though the entire spectrum of real estate on the East End had been stabbed by a fatal seizure of doubt—to wit, the buying public is not buying. You see, even the Hamptons is not immune to the vicious vagaries of economic forces, as surely as Route 27 must rank among the worst roadways in the country.

Whether the roads are lined with Bentleys or Hyundais, our divergent populace of illegal aliens and writhing billionaires appear to be spending money currently on tangibles only. Whether they be heirloom fruits or CVS shovels, the big stuff awaits purchasers.

Indeed, there are no startling sales figures to boast about as in years past. Sellers now appear to have come to their senses by accepting the fact that very few people want to buy overpriced houses, even if they're not as overpriced as before. Prices are trickling down. Now we'll have to see if these audacious markdowns will open the floodgates.

Many observers say this is the time to buy assets like real estate, at a time when there seems to be little demand. This implies one would get a good buy, a large item on sale below where it's usually marked. Of course, it makes sense to do so. Will buyers remain scared? We'll soon see...

Great swathes of houses that were, for example, $15 million are now $12 million. That's a tremendous cut. Is it enough? Should prices be rolled back to 2002 levels to spur interest? Would that make a difference? Maybe there are some among us who we think are still sitting pretty but who actually aren't. It's hard to tell when the trappings of wealth cover the truth.

Then there are still these enormous spec houses in the offing. A new one, I'm told, is planned for a Further Lane locale, one that will be priced at about $20 million. No doubt it will be chock-a-bloc with the latest "innovations," and sheathed in an architectural shell that is supposed to appeal to people of impeccable taste.

Also loose in my theater of the absurd are a few one-acts playing out along the ocean and elsewhere at stratospheric prices. Several along Further Lane start at $75 million and up. How about Two Trees Farm in the Bridgehampton hills offered at $100 million plus? Are there no bounds? Do these tastemakers know something that none of us have yet to realize?

What part do the brokers play who hawk with such imperturbability? To be fair, many shake their heads in bewilderment when asked by sellers for representation. But, hey, a listing is a listing, and fools seem to be lurking behind every green door of illusion.

To play on the safe side in dangerous times, the overriding rule of real estate investment holds true: location, location, location. If you do take the plunge, it better be in the right neighborhood.

Are all the obvious places in the Hamptons safe bets? Over time, yes. Here are my suggested rules: on Halsey Neck, not Hill Street. Look at Further Lane not Cove Hollow. Ocean Road wins out over Meadowlark. Stay away from north of the highway unless it's on tremendous acreage and selling real cheap. Cobb Road is preferable over Flying Point. As for village lanes in East or Southampton, forget about the blue color streets that have been recently gentrified. Stick with solid south-of-the-highway addresses, best buys even in bad times. That leaves Hunting Lane a sure winner over McGuirk, even if it's more expensive. This is also to say that Dayton Lane will be a better location than Osborne or Foster Crossing rather than Meeting House.

Is oceanfront better than Georgica Pond in East Hampton? Is Meadow Lane better than Gin Lane? Such differences are probably moot.

The East End is out of balance. There are too many people with nowhere to go in too small a geographical confine, marauding up and down Route 27 looking for a parking space, a dinner reservation or a seat in the movie theater—all this packed into a 16-week season that is relentless.

When all the summer visitors, renters and the like leave on Labor Day, what's left is a vital scape of villages and towns hugging the coastline and emerging as just another year-round neighborhood that swells in the summer and snoozes in the winter.

Except that the year-round population is growing slowly but surely. Such divergences as the Ross School point to more than just a disparate seasonal community. Our main streets are useless retail byways for most of us, but I just consider them icing on the cake, a case where the crumb is better than the frosting.

Locals (who are they, exactly?) are up in arms, for instance, over the re-opening of the Amagansett Farmer's Market, which, for years, was not a very viable concern. Bins of local vegetables seemed to wilt with no clear place of origin. Now a known retailer, Eli Zabar, has taken over. Who else could have done it? The building might have been razed to host a village strip mall. At least it serves the community at large, rich or poor. Yes, the prices of foods bearing the Zabar label are expensive, but the local corn is 65 cents per stalk as elsewhere and there's an interesting selection of farm-to-table products from local and regional New York farms, like real farm-fresh butter and cream otherwise hard to find in this so-called mecca of farming and fisheries.

The problem with locals in all summer communities is that they are outnumbered and their swagger holds no sway. But one seems to feel compelled to hear their cries as some sort of gospel. Interestingly, the local governments are still run by locals in their short-sleeve shirts and arched brows, forming a permanent scowl of righteousness across the divide. New York City got it right by electing someone like Michael Bloomberg as mayor, a highly successful businessman billionaire who runs the city by the guidance of the bottom line. Our locals have yet to get government right or the know-how to deal with a demanding summer population who provide the tax dollars that keep police chiefs in air-conditioned cruisers.

Local leaders make parking a crime, commerce an imposition and quality of life a misdemeanor. When was the last time you could saunter onto the beach without paying for a $325 beach permit without a lifeguard on duty? If the East End were to be run by some Bloomberg-like bigwig, who in our midst could qualify? Steve Schwarzman? Bruce Wasserstein, or Christie Brinkley? Mayor Steve, Supervisor Wasserstein and Social Services director Brinkley could do a bang-up job indeed.

What any of this has to do with the price of a luxurious vacation home or the state of the East End economy beats me, but somehow it's all related. At least we have eight months to regroup and reconsider until the next season.— S.D.

Reason for Optimism?
As the number of sandy, sandal-clad feet crowding the sidewalks dwindles and the scents of SPF and spirits become a memory, local real estate agents are taking stock on yet another Hamptons summer season. What are veteran brokers taking away from this less-than-booming time as they look forward to pre-2009 sales? More than ever, most agree, pricing is everything.

"Things have got to be priced right to sell. That was cemented this summer," says Cathy Dransfield of Sotheby's International Realty. "If something is priced to sell, the buyers and the brokers sort of sniff that out and there becomes—depending on how fabulous the house is—a bit of a frenzy for the jewel that is reasonably priced."

Case in point: Dransfield listed an Amagansett cottage at $2.89 million in 2006 with little interest, save for one offer at $2.4 million, so the seller took the home off the market thinking the sole offer too low. Dransfield relisted it this year at $1.95 million, several buyers clamored to close the deal, and the house ended up selling for $2.1 million—$150,000 over asking price. "But the numbers have got to be seriously appealing to begin with or that won't happen," she admits.

"It's been a tough market in terms of selling homes because of all the different mortgage issues and because of the amount of inventory on the market," says Brown Harris Stevens VP Charles Manger. "People don't feel like they need to push themselves to get an offer in. People also are paying close attention to the stock market, which is tied to the real estate market in some ways." There are brokers who are doing better this year than last year, he says, but the majority of agents are having trouble getting buyers and sellers to come to the necessary meeting of the minds. "This is not a time to test the market to see if you can sell yourhome," he says. "That doesn't help the market because all it does is clutter the market with properties that are not really for sale."

J.R. Kuneth of Devlin McNiff says many of today's prospective buyers fail to realize the market has experienced significant softening in the past several years, and remaining safely on the sidelines means they may miss exactly what they've been waiting for. "The people who have cash are all going to come at the same time. They're all going to come between September and December. Many want to buy between the election and the holidays."

Conversely, the players are prepared for action. "The real sellers are listening to us in terms of where the price should be, and the real buyers are being thoughtful when they step up to the plate," says Doreen Atkins, vice president at Sotheby's. "It used to be that you really couldn't negotiate that much between the two, but you can clearly see the difference now. The real buyers and sellers do business a little smarter. There's a clear understanding of who wants to buy and who wants to sell. It makes my job a lot easier."

Today's serious buyers are doing their homework, adds Kuneth. "People are not haphazardly wasting their own time as well as ours as much as in the days when money was free," he says. "I haven't had a tour where someone has said show me everything since 2006."

Why Wait?
Prudential Douglas Elliman's Jay Flagg notes a 10 to 15 percent drop in asking prices among properties north of the highway and in the spec home market but says properties in more desirable areas are less pressured. "Many of the sellers out here, unless they're extremely motivated, will wait until the market recovers because they're under no pressure to sell," he says. "So can the market get worse before it gets better? Yes, but you may not see prices go down significantly. You may see little to no activity with desirable properties until the market recovers."

To that effect, Lynn November, Flagg's colleague at Prudential, says she has seen increased interest in Quogue properties. "We've got value, great water and there isn't the traffic to deal with," she says, adding that she's also working with more buyers from Europe and China. She plans to increase her marketing efforts to lure new international business. "We've had a really diversified group of people. That was a pleasant surprise this year."

At Corcoran, senior vice president associate brokers Jack Pearson and Cee Scott Brown have experienced success this season, teaming up to sell 10 homes for a collective $36 million since May. "We had a tremendously busy summer over last year, and are on par year-to-date —and last year was our biggest year ever," says Pearson. "I know a lot of people may not have been as busy, but for us it has been strong."

Pearson says properties that left no room for complaint or concern were in high demand this year. "Really top-shelf things are what moved," he says. "If it was a waterfront listing or really gorgeous vintage Village listing, there was activity. People wanted them and we've even had bidding wars, which was great. For a property maybe not in as good a location or in need of a lot of work, the price has to be right." High-end new construction, whether in a village or south of the highway, continues to be in demand, he says, "particularly if beautifully and creatively done."

Über-broker Gary de Persia of Corcoran, who is generally regarded as the top listing broker in the Hamptons, has been meeting with clients to explain the need for more flexibility. "I see a more realistic attitude emerging from sellers," he reveals. "We're not advertising that many of our listings have been reduced in price significantly, but that's the case. Many $10 million to $12 million prospects are now viewing properties that were priced at $15 million or higher. Suddenly, those comparatively new values become a catalyst. We expect to close some serious business this month and next."

One final piece of this season's puzzle is the issue of current supply and demand. The number of new home permits issued locally has dropped steadily over the past few years. The high-end spec building boom is over. Demand exists, we're told, in the $10 million and up range for homes south of the highway with good-sized lots and tennis courts. Demand for homes under $5 million will continue to be tempered by the ability to obtain a mortgage. Owner financing could be a positive factor.

No Risk, No Reward
Despite no shortage of inventory in the spec house category, Corcoran's Jack Pearson teamed again with designer Andrew Taiani to develop their second spec home, this time in Water Mill. The duo's first Southampton Village spec home sold for $2.9 million in 2006.

"We believe in the market. I think if you're smart about what you do and you study the market to see where you can fit in, business will hold up," says Pearson. "A couple years ago, anything would sell. Now you have to be much more studied in what you do to sell something at the right price."

Taiani designed the three-story home to include detailed architectural moldings, paneling and other woodwork. Completed last month, the 5,700-square-foot home was built in the traditional English style with a hip roof and diamond windows. It is offered unfurnished at $5,995,000. Call (516) 457-7111 for details.

Palm Beach Report
The social season of our sister society enclave to the south has been redefined in recent years, now extending past Easter to Memorial Day. Palm Beach typically heads into full-scale hibernation by June 1, but this year, not even thunderous August rains have kept shoppers from browsing the on-sale wares on Worth Avenue, where the Bentleys and Benzes that typically line the streets in season have left few open spaces this summer. Bicycle bells are ringing on the Lake Trail, and there's nary an open table at the Palm Beach Grill.

It would appear the economy is alive and well on the island, where young couples and families are more frequently choosing to locate their primary residences. These hipsters may travel extensively to the same locations where their more seasoned neighbors in 33480 own second and third homes, but they return to Palm Beach to recharge and can be seen tucking into Forte di Asprinio, Rocco's Tacos or Nick & Johnnie's—the latest Coniglio family hotspot—where it is actually possible to see and be seen before Thanksgiving.

So who is this new Palm Beacher? "Younger professionals who have done well in the hedge fund world, the business world, the Internet. You're seeing the 40-something and 50-something buyers, and even 30 somethings," says Corcoran vice president Dana Koch. "I think there's 55 houses for sale between $3 million and $5 million (on the island). And you can buy things at pricing from three, three and a half years ago. And that's all based on the competition and the inventory, so buyers really have choice."

Baby Boomers are selling these mid-range properties, Koch says, downsizing to condos and town homes or upgrading to waterfront properties, which remain in high demand. "The over-$5 million market in Palm Beach is very healthy. The high end of the market is really supporting the rest of the market, and I would not be surprised to see, at the end of the year, that the average price and the median price have increased."

August and September are typically the slowest months for sales, says Ava Van de Water at Brown Harris Stevens, but transactions are being made. "The number of condominiums sold in Palm Beach is virtually the same as last year, slightly up in the area south of Sloan's Curve, but mostly $500,000 or less," she says. "The number of single-family home sales has dropped by nearly one-third, according to our Palm Beach Multiple Listing Service. The high end and low end are the strongest segments, with the middle of the market—$5 to $10 million—the softest."

Corcoran broker Rosalind Clarke admits she can't predict what the next year will bring, but calls the clients who have shopped in the height of the summer "very serious."

"The high end of the market is proving to be as strong as ever, and I had a very good showing yesterday of my oceanfront property on Jupiter Island, which is listed for $25 million," she says. "There are also buyers looking at the very low end of the market which, in Palm Beach, is just under $2 million. The $2 million to $7 million range has been sluggish." Prices are holding on the island, she says, but the number of transactions is down from previous years.

Eric Sain, president-elect for the Realtors' Association of the Palm Beaches, says the Palm Beach real estate market has reached a stable plateau. "Most of the economists who I have heard speak recently estimate that the biggest hit to the high-end real estate market has happened," he says. "There will not be the dramatic escalations that we saw during our 'big run,' but realistic sellers and willing buyers are starting to come to a meeting of the minds."

Greater Palm Beach County has been less insulated from the sub-prime mortgage crisis. "There continues to be news of record foreclosure rates, failing consumer confidence and other factors that affect our middle class in Palm Beach County. As banks begin—or continue, as the case may be—to work with families to restructure financing or short sale properties, we will know more, but the forecast is gray at the present time. Again, deals are there for the making, but buyers have to make the offers and be prepared for negotiation."

Koch cites the Presidential election as a potential turning point in real estate for Palm Beach proper and beyond, not only affecting consumer confidence but also the capital gains tax structure. Additionally, the state continues to debate Amendment 5, which would eliminate the property taxes that fund education in favor of a one-cent state sales tax increase, and reduce an assessment cap on non-homesteaded properties. The proposed amendment was recently was thrown out, as it was unclear how the K-12 budget would recoup the $4 billion not covered by the sales-tax hike. Gov. Charlie Crist plans to appeal the ruling on 5, which is backed by Chuck Bonfiglio, president of the Florida Association of Realtors. His mantra: "Everybody's struggling to make ends meet. Property taxes are out of control. In the past six years they've more than doubled. Take control of your finances. Vote Yes for Amendment 5."— A.D.

Manhattan Report
For a take on the Manhattan market, we spoke with Warburg senior VP Ronnie Lane. "Our firm's sales are up for the year to date," she offered. "But let me qualify this statement. We're just now experiencing closings of apartments at The Plaza and 15 Central Park West that went to contract last year, or before. I might add that resales at 15 Central Park West have been so strong that we've seen a doubling or tripling over initial prices. Not quite those of The Plaza—but very strong. Another current plus is that the Europeans are still buying."

Warburg was an early entrant to the Harlem scene. "Early on there were so many compelling values. The market took off. This area is not as hot as before but developers have been alert to the changing dynamics and those who have adjusted accordingly, are seeing sales action. When Manhattan condos are well-priced, they sell. One of our brokers recently reported a bidding war over a two bedroom apartment at Manhattan House. If there's a problem today, it's finding a sufficient inventory of 'quality' apartments." Asked to predict possible '09 sales trends, she said, "It's too early and there are too many variables. Ask me after this year's election results are in and I'll be in a better position to respond. Here at our firm, we remain cautiously optimistic." Adds Dottie Herman, president and CEO of Prudential Douglas Elliman, "Summer is never the busiest season, but sales have been steady, with volume a little off and prices holding. What we're seeing is a very price-sensitive market with people out there on the sidelines waiting for the right price and the right property. Although the inventory is up from last year, it is still at average levels. The average sales prices still remain steady and New York has the same allure as always."