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September 2009


REAL ESTATE

Deeds & Don'ts
by Scoop Drummond, Aime Dunstan, Lily Oliver and Diane Strecker

INSIDE STORIES BEHIND AREA
REAL ESTATE DEALS

[Image]
For Nature Lovers (click image for larger view)

Our tri-state/Florida market roundup, which follows, may prove to be a leading indicator. Palm Beach properties that were among the first to experience price erosion during the current recession now appear to be leading the turnaround. Bargain-hunting prospects who have been on the sidelines are finally in a buying mode. The Hamptons may be next! Read on—and read between the lines.

With sales improving "only slightly," local brokers are apprehensive but "mildly optimistic." September and October are traditionally busy months for Hamptons brokers—and should be again this season. The problem, many say, is that they'll be busy showing properties to prospects who want to "see everything" before making a decision. The consensus is for a greater number of sales this season at prices "that haven't been seen in years." —Staff

SCOOP'S VIEWS ON THE MARKET
A remarkable event has occurred in the Hamptons. Prices have reached a reality level so compelling that buyers are looking at real estate once again in earnest. And as soon as the make-the-disparaging-offer mentality abates, transactions will happen more quickly.

For now, the usual scenario is that buyers present an opening offer at least 30 percent off the asking price. The seller will huff and puff and most likely not even respond. The buyer takes the tough-guy stance, figuring out the next move to make the seller squirm.

It's a sloppy game, done by a lot of slick individuals. But, hey, it's the Hamptons, where anything goes.

Not all brokers are pounding the pavement with eager customers, but those who are—the established pros—are writing up sales. A significant house on the ocean in Montauk has sold in the double-digit category. It was quietly on the market and the buyer had his eye on it for over a year and determined that it was the right time to acquire it.

A long-awaited Hook Pond property that came on the market as an estate sale was snatched up immediately for over $20 million. Several other key East Hampton residences have garnered eager buyer activity in the $10 million category.

And the only estate-setting parcel of land in East Hampton, on Hither Lane, at just under $6 million, has had a lot of interest from residential buyers and spec builders. Erect a 7,500-square-foot house on it at $500 per square foot and value has been created for less than it would be to purchase an existing structure.

The vast landscape elsewhere is a mixed bag. North of the highway along the nondescript roads with funny names in the woebegone woods wallow and wilt. The village lanes off East Hampton's Newtown Lane or Main Street remain like sitting ducks because they're all too expensive. And no matter what you do, these neighborhoods are, at best, déclassé. Those expanded or rebuilt capes used to fetch nearly $3 million. Forget it. Those who bought at the peak better like where they are because a profitable resale isn't likely anytime soon.

Grade-B streets in Georgica are sporting a lot of spec houses on marginal sites south of the highway begging for buyers who are plainly not interested. Prices are coming down, though, with million-dollar reductions. The same duds in Sagaponack and Bridgehampton are still available, with two exceptions that reached agreement in the $12 million range.

As for waterfront properties, they remain up in the air. The key oceanfront offerings in Sagaponack have had some attention. Gibson Lane has one at $24 million, though so far no meaningful bids. It's a dated contemporary house standing on a stunning dunefront with pool and tennis court to boot. It's a perfectly livable place until one decides what to do with it. The land is gorgeous, the house is a basic boxy-but-solid contemporary and the value is there for those willing to approach it under $20 million.

Off Daniel's Lane is a midcentury-style house that seems generously priced at a reported $38 million (see above image). Agreed, the house has a Phillip Johnson pedigree but to me it's akin to an old poodle mired in a muddy puddle but trying still to look fetching.

[Image]
The Glass House (click image for larger view)

The current debate among buyers—and sellers—is what is market value is these days. Will it recover to old highs set in 2007 or will prices linger for a couple of years until the next big upturn—or downturn occurs? Those who still persist in overpricing their properties are ignoring world events.

Some pundits feel that significant appreciation is a long way off. Others are all too eager to see price spikes spiral upwards.

We have some sense of perspective from the past. In the late 1980s the market tumbled. It reached its lowest point by 1990-91 and then enjoyed a steady rise higher, with a few stalled moments here and there until the pinnacle of 2006 and 2007. That's roughly a 15-year up-trend. Maybe that'll happen again.

Still, there are offerings that defy the marketplace. There's a gorgeous house off Georgica Road asking nearly $20 million. I think that's highfalutin territory without having water frontage of some kind to offer. Landlocked estates stratospherically priced are not an easy sell. The ocean is a three-minute drive away— but it's not in the backyard.

The last two weeks of August were a fairly busy time for brokers. And renters, who comprise the buying pool big-time, and were here in droves. There were more August renters this year than full-season folks; popular too were two-week renters, a market that never existed here before now but is commonplace in other vacation markets.

Deals may be on the drawing board, contracts are being negotiated and time will tell which survive and how the season fared, perhaps better than we expected. —S.D.

Editor's Note: Scoop's opinions do not reflect the view of C&G.

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