Hamptons real estate heats up for summer
Demand for homes in the Hamptons, the New York summer retreat of celebrities and executives such as Calvin Klein and Goldman Sachs Group President Lloyd Blankfein, is rebounding with Wall Street bonuses.
The average sales price rose 29 percent to an all-time high of $1.1 million in the first quarter, said Dianne Saatchi, a vice president in the East Hampton office of Corcoran Group, the area's largest brokerage. Rentals for the 14-week season that begins this Memorial Day weekend are as much as $550,000.
"It had become fashionable in the lean years to boast about how little you paid for a Hamptons house," Saatchi said. "We seem to be moving back to the pre-recession market, with people boasting about how much they paid."
Compensation levels on Wall Street are climbing as companies like GoldmanSachs and Citigroup report record profits.
Pay for investment bankers will rise 22 percent on average this year with managing directors earning $1 million, the most since 2000, according to New York consulting firm Johnson Associates.
The Hamptons, on the eastern tip of Long Island about a two-hour drive from Manhattan, offers a haven where year-round homeowners such as Hollywood mogul Steven Spielberg mix with the financial elite, including hedge fund managers George Soros and Stanley Druckenmiller.
A five-bedroom newly built house that is a two-mile bike ride from Main Beach in East Hampton, home to actress Renee Zellweger and billionaire financier Carl Icahn, is on the market for $1.97 million. A four-bedroom house with half an acre of land in the Springs area of East Hampton, a neighborhood where the town's lower-income residents live, is for sale at $535,000, Saatchi said.
In Bridgehampton, where residents include Cable News Network founder Ted Turner and model Christie Brinkley, it costs $950,000 to buy a one-acre building lot with distant views of the ocean, she said.
Prices in the Hamptons dwarf those paid by most home buyers in the United States. According to the National Association of Realtors in Washington, the median selling price of previously owned houses across the nation in April was $176,000, up 7.3 percent from $164,100 in the same month a year earlier.
The demand for home purchases in the Hamptons partly reflects summer rental rates in this popular resort area, said Tony Cerio, a broker with East Hampton Village Realty.
"Someone dropping $50,000 or $60,000 on a summer rental — that's a down payment on a house, and with interest rates so low now, everyone wants to buy," Cerio said.
The average U.S. fixed mortgage rate last week was 6.3 percent, according to Freddie Mac. While that is up from 5.3 percent a year ago, it remains below the 6.8 percent of two years ago.
Full-summer rentals start at $15,000 for a one-bedroom cottage with no pool and no air conditioning, located three miles from the beach, Cerio said. Waterfront homes lease for prices starting at $150,000, he said.
Denise Rich, former wife of pardoned fugitive Marc Rich, rented her Southampton estate on Cooper's Pond at $550,000 for the summer, the highest ever paid for a Hamptons rental. The home, a walk from the town helipad, has a seven-bedroom mansion, a four-bedroom guest house, tennis courts and a reverse-current lap pool that allows swimmers to exercise in place.
About 40 percent of the area's rentals are taken, about par with last year, he said.
"You're going to see a lot of bottom-feeders coming out this weekend, thinking they're going to find cut-rate rentals, but they may end up disappointed," Cerio said. "These owners are so wealthy they'd rather not rent at all if they don't get what they want."
The top sales price during the past six months was $23 million for Academy Award-winning producer Martin Richards' Southampton mansion, bought by former NetOptix Chief Executive Gerhard Andlinger.
The record sales price in the Hamptons was the $32 million comedian Jerry Seinfeld paid for singer Billy Joel's oceanfront mansion in East Hampton in 2000.
The most-expensive house for sale is the 25,000-square-foot Mediterranean-style Bridgehampton home owned by Cheryl Gordon, the widow of Manhattan commercial real estate mogul Edward Gordon, which is on sale for $75 million.
It has been available since last summer with no takers, at least in part because it's not on the waterfront, said Paul Brennan, regional manager in Bridgehampton for Prudential Long Island Realty.
The estate has 65 acres, a 75-foot swimming pool, an "orangery" or greenhouse, and a Rees Jones-designed nine-hole golf course.
"It seems a little exorbitant, even in the Hamptons, to pay that kind of money for a vacation home that's not even on the ocean," Brennan said.