Economy teetering, but Wall Street back to buying posh beach homes

Hamptons, New York, home sales more than doubled in the second quarter from a year earlier, solidifying a turnaround after two years of Wall Street reluctance to splurge on beachfront property.

Transactions climbed to 479 in the towns on Long Island’s East End, the second-biggest jump in at least a decade of record keeping. Larger, more expensive homes boosted the median price 17 percent to $900,000, New York-based appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. The largest sales rise was in the first quarter.

“We’ve returned to a more normal volume of sales,” said Jonathan Miller, president of Miller Samuel. “It feels like a boom because there was such a void in activity a year ago.”

A U.S. stock market recovery helped ignite confidence, said Judi Desiderio, president of Hamptons, New York-based Town & Country Real Estate. The Standard & Poor’s 500 Index gained 29 percent from the beginning of 2009’s second quarter through the end of June this year. New York City financial companies added jobs for a fourth straight month in June, helping bring the unemployment rate down to 9.5 percent. Gains included 2,400 finance jobs, according to the state Labor Department.

“Wall Street is employed again,” Desiderio said. “They’ve had some winnings or earnings from the market and they’re putting it into real estate.”

The Hamptons, a string of towns beginning about 75 miles (120 kilometers) east of Manhattan on Long Island’s south side, attract financial and Hollywood celebrities including Goldman Sachs Group Inc. Chairman Lloyd Blankfein and media mogul Martha Stewart each summer.

Down From Peak

With the average price of Hamptons properties down 24 percent from the 2007 peak, sellers are getting more realistic, said Paul Brennan, Hamptons regional manager for Prudential Douglas Elliman.

A four-bedroom house in Sagaponack with waterfront views was on the market for $8.9 million for more than a year when the sellers cut the price to $5.2 million. It sold within weeks to a retired investment banker, Brennan said.

“As a broker, I could say, here’s a good house, a good location and now a good price,” he said.

Sellers shaved an average of 6 percent off their asking prices in the quarter compared with 16 percent in the same period a year earlier.

The number of properties for sale declined 5.9 percent to 1,564, Miller said.

Demand Shifting

Town & Country issued its own Hamptons report this month and also said Hamptons sales doubled. Those records showed the median price fell 2.6 percent to $925,000.

“Demand for the 10,000-square-foot house with the pool, tennis and the putting green has shifted,” Desiderio said. “People want manageable properties.”

Luxury sales throughout the Hamptons and Long Island’s North Fork climbed to 58 properties, an increase of 57 percent from a year earlier, Miller Samuel and Prudential said.

Miller defines luxury as the top ten percent of all sales, a category that included properties sold for $3 million or more in the second quarter. Those transactions accounted for 40 percent of the dollar volume of sales, Miller said.

“It shows you how important the high-end market is,” Miller said. “You can’t approach recovery until the high end sees activity.”

The median luxury price climbed 3 percent to $4.1 million.

Roland Chemtob, a part-time builder in Hamptons, saw the market change through the prism of his latest East Hampton project.

Meadow Lane

He put the four-bedroom home on Horse Meadow Lane up for sale in 2009 for $2 million, declined a lower offer and rented it out through January of this year. In May, a buyer from one of the “Big Four” accounting firms offered him $2.35 million.

It was two weeks too late: Chemtob and his family had moved into the house after razing their own to build a new one.

“They were crying,” said Chemtob, 44. He also said he thinks the latest sales numbers mean the slump has turned. He’s in contract to buy three parcels of land.

“I’m relieved,” he said. “I’m betting the market gets better.”