A housing slump? The Hamptons don't see it
GARDEN CITY, N.Y. -- Forget window shopping the photos of million-dollar manses in the real estate shops on Southampton's Main Street. If you really want to know how the housing market in the Hamptons is faring as summer beckons, Steven Gaines suggests an unusual yardstick.
He says the best barometer of how people in the Hamptons are doing is the price of the lobster salad at the gourmet shop in Sagaponack.
Right now, it's $100 a pound.
"When you're spending $100 a pound for lobster salad, what's $15 million for a home?" said Gaines, a local author and aficionado of all things Hamptons.
With Wall Street booming and stock markets hitting record highs nearly every day, the real estate trade in the Hamptons couldn't be better.
And money appears to be no object.
Houses are routinely selling for $10 million to $15 million, and people don't think twice about shelling out $200,000 for a summer rental -- that's Memorial Day to Labor Day.
Last week, it was reported that financier Ron Baron paid more than $100 million for a 40-acre East Hampton property -- no home, just land -- located next to his sprawling estate.
"The houses in the $10 million to $20 million range are selling very well, which, of course, reflects the boom on Wall Street," said Gaines, who hosts a radio program on Hamptons culture every Sunday from the lobby of the American Hotel in Sag Harbor.
Going back nearly a century, the Hamptons -- an unincorporated confederation of villages and hamlets stretching 40 miles along eastern Long Island's south shore -- have traditionally welcomed the rich and famous from near and far. Pristine sandy beaches and bucolic country roads have been a haven for blue bloods and wannabes alike, all willing to plunk down parts of their fortunes on Hamptons palaces, big and small.
Judi Desiderio, president of Town & Country Real Estate, estimates 75 percent of her customer base comes from Manhattan power brokers. "As long as the economy in the city and on Wall Street is doing well, our high-end market is also doing well," she said.
While the national real estate market has been described as soft, the same does not hold true for Manhattan or the Hamptons, said Stuart Epstein, owner of Devlin-McNiff Real Estate.
"If there's an imaginary bubble over Manhattan, I'd say that bubble extends 125 miles out to the end of Long Island," he said.
By all measures, times have been very good on Wall Street. The banking sector has been on a tear, driven by a spate of mergers and acquisitions in recent months. The Dow Jones industrial average is getting closer and closer to 14,000. And Wall Street paid out about $24 billion in year-end bonuses last year.
"These folks," Epstein said, "there's a lot of them, they're making great money and there are not all that many ways they can spend it."
That cash inevitably tumbles into the Hamptons as people start flocking to the beach and boarding the sailboats and yachts this weekend.
Desiderio said many potential buyers remained on the sidelines the past year or so, but with the Dow soaring to record highs this spring, sales are beginning to sizzle.
"We also have the aging baby boomers who are looking at retirement," she said. "What better place to retire to than in the country?"
On the rental front, Paul Brennan of Prudential Douglas Elliman said it's been "a pretty typical" year.
"Good rentals always go, no matter how much, each year," he said. "I wouldn't say prices have jumped significantly on rentals."
Epstein said the majority of the houses this summer are renting for between $50,000 and $200,000. For that, you're likely to get a 4,500-square-foot home, with plenty of amenities, including a swimming pool.
Some fancier houses have rented for as much as $750,000 or $800,000, but those are the exceptions.
(For the record, an $800,000 rental from Memorial Day to Labor Day comes out to about $8,000 per day.)
When prices climb that high, many people opt to buy rather than rent, brokers said.
"It's the same old, same old," says veteran real estate executive Diane Saatchi of the Corcoran Group. "People are spending an incredible amount of money to be in the Hamptons. It will be as crowded as ever.
"Naysayers keep saying, 'It can't last, it can't last,' but every year the crowds keep showing up and the restaurants are jammed.
"It's the Hamptons."