Hamptons seemingly immune to U.S. housing decline
Hamptons seemingly immune to U.S. housing decline
By Kathleen M. Howley
Copyright by The International Herald Tribune and Bloomberg News
Published: May 28, 2007
BOSTON: Ron Baron, founder of the investment company bearing his name, did not hesitate to pay $103 million for a 40-acre parcel in East Hampton, New York. It is the record for a residential property in the United States . . . and just a little less than double the annual compensation of some of his neighbors.
House prices in the beach retreat with residents like Steven Spielberg and the billionaire investor Thomas Lee rose 14 percent during the first quarter, even as the national median fell. The market in the Hamptons - former potato farms where seagull cries now mix with the sounds of well-tuned Ferraris - is fueled by salaries on Wall Street, 40 minutes away by helicopter, said Diane Saatchi, a broker at Corcoran Group in East Hampton.
"People have made an incredible amount of money on Wall Street over the last few years," said Saatchi, who started selling real estate in the Hamptons 19 years ago. "For them, spending millions on a summer home to be near their friends isn't a big deal."
Wealthy New Yorkers trade their Manhattan apartments for summertime houses in the dozen hamlets of East Hampton and Southampton to maintain their social standing, said George Simpson, president of Suffolk Research Service, a real estate records company based in Southampton.
"The housing market all over the United States is down, but not here because this is where all the rich people want to be seen in the summertime," Simpson said.
The Hamptons began attracting crowds of Manhattan socialites and executives in the 1960s. Their demand pushed up property values of century-old estates built for wealthy industrialists like Harry Payne Whitney and cottages where artists like Jackson Pollock had summered.
The record price Baron paid is about double the salary of elite Wall Street executives like Lloyd Blankfein, chairman of Goldman Sachs and a Southampton summer resident who earned $54 million in 2006.
Incomes for Wall Street traders and investment bankers are surging as companies pay higher salaries to fight the lure of hedge funds. Last year, the five biggest Wall Street firms paid a record $36 billion in bonuses all together.
The median price for East Hampton, where the actress Renee Zellweger and the billionaire financier Carl Icahn own vacation homes, rose to $970,000 in the first quarter from $850,000 a year earlier, Simpson said. Total sales volume rose to $300 million from $216 million a year earlier.
While prices are increasing, transactions have lagged behind. East Hampton had 160 sales in the first quarter, down from 165 a year earlier and a record 221 homes in 2005.
In Southampton, where the fund managers George Soros and Stanley Druckenmiller own homes, the median price was $795,000 in the first quarter, 6.7 percent higher than a year earlier. The total sales volume fell to $545 million from $572 million, and the number of transactions declined to 337 from 391.
"There are some staggering numbers at the high end, but the market for houses in the $2 million to $3 million range is just chugging along," said Paul Brennan, Hamptons regional manager of Prudential Douglas Elliman Real Estate. "Properties are selling, but I wouldn't call it hot."
Southampton includes the villages of Water Mill, where the actor Richard Gere owns property, and Bridgehampton, site of the four-bedroom house that the model Christie Brinkley put on the market this month for $7.9 million.
"Some of this year's demand is being driven by Europeans, because of the weak dollar and strong euro," said Susan Breitenbach, the Corcoran vice president who lists Brinkley's property. "To them, a home in the Hamptons seems like a bargain."
For many U.S. buyers, stricter lending standards resulting from record defaults among subprime borrowers have
made it tougher to purchase real estate. For most Hamptons buyers, it has had no effect, said Judi Desiderio, president of Town & Country Real Estate in East Hampton.
That is because three-quarters of Hamptons buyers do not use mortgages, said Desiderio, who has been selling real estate in the area for 26 years. Of those who borrow to buy real estate, about 10 percent do it from necessity and the others opt for a home loan because of temporary cash-flow issues, she said.
"If you're buying a house over $5 million in the Hamptons, you don't even know what the 'M' word means," Desiderio said, referring to mortgages. "We don't even bring it up, it would be an insult. They're strictly all-cash deals."
By Kathleen M. Howley
Copyright by The International Herald Tribune and Bloomberg News
Published: May 28, 2007
BOSTON: Ron Baron, founder of the investment company bearing his name, did not hesitate to pay $103 million for a 40-acre parcel in East Hampton, New York. It is the record for a residential property in the United States . . . and just a little less than double the annual compensation of some of his neighbors.
House prices in the beach retreat with residents like Steven Spielberg and the billionaire investor Thomas Lee rose 14 percent during the first quarter, even as the national median fell. The market in the Hamptons - former potato farms where seagull cries now mix with the sounds of well-tuned Ferraris - is fueled by salaries on Wall Street, 40 minutes away by helicopter, said Diane Saatchi, a broker at Corcoran Group in East Hampton.
"People have made an incredible amount of money on Wall Street over the last few years," said Saatchi, who started selling real estate in the Hamptons 19 years ago. "For them, spending millions on a summer home to be near their friends isn't a big deal."
Wealthy New Yorkers trade their Manhattan apartments for summertime houses in the dozen hamlets of East Hampton and Southampton to maintain their social standing, said George Simpson, president of Suffolk Research Service, a real estate records company based in Southampton.
"The housing market all over the United States is down, but not here because this is where all the rich people want to be seen in the summertime," Simpson said.
The Hamptons began attracting crowds of Manhattan socialites and executives in the 1960s. Their demand pushed up property values of century-old estates built for wealthy industrialists like Harry Payne Whitney and cottages where artists like Jackson Pollock had summered.
The record price Baron paid is about double the salary of elite Wall Street executives like Lloyd Blankfein, chairman of Goldman Sachs and a Southampton summer resident who earned $54 million in 2006.
Incomes for Wall Street traders and investment bankers are surging as companies pay higher salaries to fight the lure of hedge funds. Last year, the five biggest Wall Street firms paid a record $36 billion in bonuses all together.
The median price for East Hampton, where the actress Renee Zellweger and the billionaire financier Carl Icahn own vacation homes, rose to $970,000 in the first quarter from $850,000 a year earlier, Simpson said. Total sales volume rose to $300 million from $216 million a year earlier.
While prices are increasing, transactions have lagged behind. East Hampton had 160 sales in the first quarter, down from 165 a year earlier and a record 221 homes in 2005.
In Southampton, where the fund managers George Soros and Stanley Druckenmiller own homes, the median price was $795,000 in the first quarter, 6.7 percent higher than a year earlier. The total sales volume fell to $545 million from $572 million, and the number of transactions declined to 337 from 391.
"There are some staggering numbers at the high end, but the market for houses in the $2 million to $3 million range is just chugging along," said Paul Brennan, Hamptons regional manager of Prudential Douglas Elliman Real Estate. "Properties are selling, but I wouldn't call it hot."
Southampton includes the villages of Water Mill, where the actor Richard Gere owns property, and Bridgehampton, site of the four-bedroom house that the model Christie Brinkley put on the market this month for $7.9 million.
"Some of this year's demand is being driven by Europeans, because of the weak dollar and strong euro," said Susan Breitenbach, the Corcoran vice president who lists Brinkley's property. "To them, a home in the Hamptons seems like a bargain."
For many U.S. buyers, stricter lending standards resulting from record defaults among subprime borrowers have
made it tougher to purchase real estate. For most Hamptons buyers, it has had no effect, said Judi Desiderio, president of Town & Country Real Estate in East Hampton.
That is because three-quarters of Hamptons buyers do not use mortgages, said Desiderio, who has been selling real estate in the area for 26 years. Of those who borrow to buy real estate, about 10 percent do it from necessity and the others opt for a home loan because of temporary cash-flow issues, she said.
"If you're buying a house over $5 million in the Hamptons, you don't even know what the 'M' word means," Desiderio said, referring to mortgages. "We don't even bring it up, it would be an insult. They're strictly all-cash deals."
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