Inside the open houses of the Hamptons: Anxious for buyers.
Manhattan may be somewhat insulated from the current housing doom and gloom, but the Hamptons have started to see real signs of softening. According to a report released by Miller Samuel and Prudential Douglas Elliman, inventory was up by 27.2 percent and sales were down by 42.4 percent in the Hamptons in the first quarter of 2008 compared to a year prior. Properties are staying on the market significantly longer, for an average of 181 days, 41 more than last year.
Still, the real estate game rolls on. So on a Saturday in early May, The Real Deal visited five open houses -- three in East Hampton north of the highway, which is often the first area to soften when the market turns, and two in Sag Harbor -- hoping to chat with buyers and brokers about how the credit crisis and housing bubble bust have hit the Hamptons. But there was a problem: There were almost no buyers. At house after house, sign-in sheets were practically bare, and brokers stood bored, taking personal calls to fill the time.
"In the city, you still get maybe 40 potential buyers at an open house," said Jennifer Kalish, an agent with Prudential Douglas Elliman, who was selling her own second home at 23 Fetlock Drive in East Hampton. "Not out here." Kalish said these days she typically sees about 10 people at her open houses, but that often as many as half of those are neighbors, not potential buyers.
Brokers said the market had definitely slowed, but called Saturday's ghost town somewhat unusual. The weather was spotty and it was the day before Mother's Day, a double whammy.
In addition, according to Rick Hoffman, regional senior vice president in Corcoran's East End office, the $1 million to $3 million price range is where the bulk of the area inventory is, so open houses in that range tend to be less crowded because there are more of them.
"We're definitely not having a fire sale in the Hamptons," said Hoffman, who was not hosting one of the open houses. "But we are transitioning to a little more of a buyers' market. People are looking for those big bargains, and this is the price range where there is the most negotiability."
At 13 Wigwam Lane, a 2,500-square-foot home in the Northwest Woods section of East Hampton priced at $1.05 million, one Manhattan couple, who asked not to be named, seemed to intuit the results of the Douglas Elliman report.
"Houses aren't moving out here," said the man, who works in film. "There's a real air of desperation among brokers. I think sellers are still in this fantasy land where they think they can get 40 or 50 percent back on their investment -- it's not realistic."
The couple said they'd been renting in East Hampton for several years and now that they've started a family -- their infant son was in tow -- they're looking to buy a place. But, they're in no rush.
"As a buyer, there's less pressure," the husband said. "It's not like four years ago when everyone was desperate to get into the market."
His wife said that after seeing a few houses in the $1 million range, they've started considering getting something at more like $800,000 and renovating to suit their needs. "I want a pool and at least three bedrooms," she said.
Inside 13 Wigwam, Prudential Douglas Elliman broker Laura Lavergne said the house, which was new to the market, had been a second home for a Long Island couple who were leaving New York. Built in 1980, it had four bedrooms and two-and-a-half bathrooms. Amenities like a pool and an acre of land, part of which abuts a natural reserve, were draws, but even Lavergne admitted that the inside of the property needed work.
The kitchen and bathroom counters were dated, the white walls were scuffed in places, and though the five ground-level sliding glass doors in the great room flooded the first floor with light, they showed signs of wear.
"Some builders have been by," said Lavergne, suggesting that someone in construction could be interesting in buying and upgrading it. "They see the potential."
About two miles away, up a steep gravel driveway and tucked inside a grove of oak trees and azaleas, sat 64 Three Mile Harbor Road, a 2,600-square-foot four-bedroom, three-bathroom home selling for $1.1 million. According to broker James Keogh of Prudential Douglas Elliman, the house had been on the market about a month and was initially listed at $1.3 million.
The sellers, an older couple who used it as a second home, were moving to Florida to be closer to their son. Keogh said the price drop reflected the couple's increased motivation to sell.
Like 13 Wigwam, 64 Three Mile Harbor boasted an in-ground pool and was surrounded by old-growth trees. There was a sound system throughout the house, including on the wooden pool deck, and stainless steel appliances in the kitchen. Drawbacks were cracked and stained countertops, a damp smell on the lower level, and mismatched carpet in the various bedrooms. But touches like French doors between the kitchen and dining room, a cathedral ceiling above the sunken living room, and a view of the boats bobbing on Three Mile Harbor added charm.
"I'd update the kitchen," admitted Keogh. "But a lot of people just come out for the weekends and don't want to spend the money."
While waiting for potential buyers, none of whom showed up in the 45 minutes a reporter was there, Keogh mused about the slow market.
"I bet we see offers around $999,000," he said. "We've been getting a lot of low-ball offers, a lot of people looking to negotiate. A lot of people are still testing the market."
Keogh said he had one interested buyer the week before, but the man didn't pull the trigger because he was concerned about road noise between the house and the harbor.
"He's from the city and he's trying to get away from that," said Keogh. "So he's still looking around on his own."
Asked if sellers are getting anxious, Keogh shrugged. "Most everything out here is a second home, so they don't need to sell," he said. "Plus, the rental market here is so good, that's always a backup."
At 47 Cliff Drive in Sag Harbor, the sellers are considering just that.
The $1.4 million "beach shack" overlooking Noyack Bay is also listed as a summer rental for $32,000. At 1,400 square feet and only three bedrooms, 47 Cliff was the smallest of the five houses and the only one without a pool (though Prudential Douglas Elliman broker Samantha Brown said permits were in place should the buyer want to put one in). It also had no pretensions of modern decor. Still, the kitchen had granite tile countertops, and the owners had recently installed solar panels on the roof, which, said Brown, resulted in energy bills of about $8 a month.
Despite these amenities, at just minutes before 5 p.m., when her open house was set to end, Brown's sign-in sheet had only one name on it.
Up the block was 9 Cliff Drive, with two-story columns at the entrance to the 3,000-square-foot home built just last year. Apparently, little expense was spared. The floors were bamboo, the countertops a powder-blue sandstone, and the tile work in the kitchen and all three bathrooms was customized. The open kitchen, dining room and living room looked out over an unobstructed view of the bay, and a floating granite and stainless steel staircase wound upstairs to the master bedroom and "lounge."
"This house is great for entertaining," said Prudential Douglas Elliman broker Susan Marlow, gesturing over one of the home's many balconies.
At just before 5 p.m., when the open house was scheduled to close, Marlow's sign-in sheet also reflected only one previous visitor. A few minutes after 5, a couple and a mother-daughter pair came in, but took a quick look and promptly left, declining to speak to a reporter.
The house was listed at $2.68 million, but Marlow said she may try to get the seller -- whom she described as "anxious to sell" -- to take it down a bit. "In this market, you have to be priced exactly right," she said.
Nobody knows that better than Kalish, who bought her bought her home in East Hampton two years ago for $1.2 million, then spent the next year "gut-renovating" the place. She blew out walls, lifted floors and installed travertine tile in the bathrooms and dark maple flooring throughout the massive main floor. All the appliances are state-of-the-art, and Kalish added some clever and dramatic details, like a pull-down step below the sink in the kid's bathroom, and the ceiling-high stone fireplace that serves as the main floor's focal point.
Kalish and her husband put the house on the market at $2.3 million in the fall of 2007, but the economic slowdown forced them to reconsider the price.
"My husband and I were like, 'OK, the market slowed down; let's price it to sell,'" she said.
The four-bedroom, four-bathroom home is now on the market for $2.1 million. Kalish, who has two small children and is thinking about another, said she's heartbroken about leaving the house, but that with all the city activities her kids are involved in, it's getting harder to get out of town often enough to justify the extra property.
"Now, we're just looking to get out and give it to a nice couple," said Kalish.