Sculptor Fredi Cohen expected the hand-carved sinks and tubs in her East Hampton, New York, home to stand out in the real estate market and help sell her three- bedroom house for $1.25 million.
Almost two years later she’s still waiting.
“People have stopped buying real estate,” said Cohen, who designed the kitchen and bathroom tiles herself. “Now I would sell it for $999,000.”
The number of unsold homes in the Hamptons rose 15 percent to a record 1,673 in the first quarter from a year earlier, according to data compiled by New York-based appraiser Miller Samuel Inc. Sales have declined the most in the 27 years that broker Town & Country Real Estate has kept records for the Long Island beach towns about 100 miles east of Manhattan.
The inventory of Hamptons’ homes would take 34 months to sell at the current pace, Miller Samuel reported, or more than three times the 9.8 months’ supply of existing homes in the U.S. as tracked by the National Association of Realtors.
Wall Street bonus cuts and job losses have resulted in fewer buyers in a community that has attracted Hollywood celebrities such as Sarah Jessica Parker and financiers, including Blackstone Group LP Chief Executive Officer Stephen Schwarzman.
Hurricane Katrina
“This isn’t like your typical Nor’easter where a tree falls and your lights flicker,” said Michael Daly, founder of the buyers’ brokerage True North Realty Associates in North Haven, New York, and a Hamptons real estate blogger. “This is more like a Katrina,” he said, alluding to the historic 2005 Category 5 Hurricane. “It’s going to be a number of years before the market recovers.”
Sales in the Hamptons plunged 67 percent in the first quarter from a year earlier, according to a report by Town & Country. It was the biggest percentage drop in records dating to 1982.
The median price dropped 28 percent from a year earlier to $698,461, mostly on a decline in sales of $5 million or more, Town & Country said. The total value of all Hamptons real estate sold in the first quarter fell 78 percent to $140.2 million.
Miller Samuel put the first-quarter median price at $675,000, down 23.5 percent from a year earlier. Inventory is at a record for the three years Miller Samuel has data.
As prices fall, buyers are searching for deals and sellers are offering discounts, according to Judi Desiderio, president of Town & Country in East Hampton, New York.
“The sellers are keenly aware that if they haven’t sold in a better market, they really need to adjust their prices,” Desiderio said.
North Fork
Susan McGraw Keber is witnessing the market from both sides.
Keber, 54, a broker for Town & Country and a model who appears in Target Corp. and Macy’s Inc. advertisements, has been trying to sell the Bridgehampton home she shares with her husband for the past year.
The couple wants to build on waterfront property on Long Island’s North Fork, an area of vineyards and beaches across the Peconic Bay from the Hamptons.
They initially priced their 2,400-square-foot home on Halsey Lane, a half mile from the ocean, on the “higher end,” at $4.55 million, Keber said. The four-bedroom house on an acre of land includes cathedral ceilings with skylights, a heated pool and fireplace. The price was based on sales south of the Montauk Highway in recent years.
“Now we’re more serious,” Keber said.
Collapse of Lehman
The couple cut the asking price to $3.95 million in April. They had been willing to rent it for the summer for $125,000 -- the same amount it went for the last three summers. Now they have pulled the property off the rental market because the offers they received were too low, Keber said.
Casual deal seekers still show up at open houses and sizable price cuts can result in offers -- even bidding wars, said Jan Robinson, president of Hampton Homes Inc., a broker in East Hampton.
When Jay Litvack, 58, an executive at a women’s footwear company, began his Hamptons house hunting in early 2008, he had a budget of $1 million for a place in move-in condition. As the Dow Jones Industrial Average fell almost 40 percent, he cut his budget to $900,000.
Litvack said he looked at 150 houses and kept his eye on a four-bedroom home in East Hampton with a swimming pool and newly renovated kitchen and floors. The seller wanted $1.3 million in March 2008. The price was lowered to $995,000 after the collapse of Lehman Brothers Holdings Inc. in September, Litvack said.
‘No Market’
The Peters Path property was then cut by another $50,000 and finally reduced to $825,000. Litvack made an offer in October and two other bids came minutes later, said Robinson, his broker.
“I held out and I held out, and then pounced,” Litvack said. “Honestly, I’m shocked what I got it for.”
Price cuts averaged almost 11 percent in the Hamptons this year through May 15, according to data compiled by Sofia Kim, vice president of research for Streeteasy.com, a real estate listings service.
Big Price Cuts
The biggest reduction is for a newly built five-bedroom home in Westhampton Beach with deck views of Moriches Bay, according to Streeteasy. The 4,000 square-foot home on Tuttle Place was reduced 50 percent to $1.6 million, said Eileen Brod, the listing agent from First Hampton International Realty.
The second most-discounted home as of May 15, is a three- bedroom, 1,472 square foot cottage that was reduced 47 percent to its current price of $950,000, Streeteasy said. Also discounted by 47 percent is a 4-bedroom house in Springs that is now listed at $685,000, down from its original $1.3 million asking price.
Vacant land sales have also declined. In the first quarter, 29 residential parcels sold for a total of $19 million, 56 percent fewer properties than a year earlier and 88 percent fewer than the same quarter in 2005, according to Suffolk Research Service Inc. in Hampton Bays.
“It’s a strong indicator for the fact that there’s no market for houses,” said George Simpson, president of Suffolk Research, a real estate data service. “There are enough of them around you’d be crazy to build one.”
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