As we move towards the end of the year, I sat down with Laura Miele Wynne and her real estate partner, Elliott R. Epstein, agents with Brown Harris Stevens
in Southampton, to gain their insights into the Hamptons real estate market. We discussed the current market, how they saw it evolving in the near and longer term future, how market conditions are impacting upon preservation, environmental concerns, and the need for affordable housing.
Both of you have been in the real estate business prior and after the market crash, how do you view the current market and where do you see it going in the foreseeable future?
The market is very slow, but I see this as a good opportunity for buyers to take advantage of the excess inventory resulting in price reductions. Unfortunately, buyers are withholding making offers waiting for the market to further decline.
I think that the best time to buy a house is between Thanksgiving and New Year, because people are focused on other things, and if you find a motivated seller, you are likely to find a good deal.
Is the market down across all price points and areas?
The market, in general, has seen a steady decline over the past two years, although the median price continues to rise, slower in Southampton than in some geographical markets.
What do you see as some of the reasons for the decline?
For one thing, there are way too many expensive houses being built in "B" locations. I have seen many times where these homes sell and are back on the market within a year because the owners can't stand the traffic morning, noon, and night. The tradesmen know all the back roads.
Are builders pricing the homes consistent with market value?
No, they are overpricing the homes but not selling at those prices.
Usually builders are very knowledgeable about the market and build to suit market conditions, so how do you reconcile overpricing with that?
Because today, everyone is a builder. They are less sophisticated in building to the market than some who have been doing it a while. It amazes me when I see the construction that is taking place despite the backlog of inventory.
I don't understand why builders don't meet with the real estate agents to ask them what buyers are looking for. Not only do market conditions change, but also buyers' preferences. For example, I find that buyers today prefer a well-appointed 4,500 square foot house to a 7,500-square foot house.
I see buyers still wanting large homes with all sorts of amenities, but the unemployment and lower bonuses on Wall Street together with the overpricing of homes are the biggest causes for the downturn in the market. We're in a real estate market where sellers don't need to sell and buyers don't need to buy.
Where is the biggest demand price wise?
Under $2 million. There is a big excess of inventory in the $4 million and above price range, which in my estimation, based upon statistical data, will take years to move.
Do buyers already have a mindset regarding which town they want to live in?
They do, but based on what they heard rather than what they know. Most buy in an area other than the one that they originally intended.
Are most buyers cash buyers?
Yes, but in the sense that their obligation to close is not contingent on getting a mortgage but they do want an appraisal and finance the purchase out of other assets they have.
How do the issues of preservation and environmental considerations fit into today's real estate market?
The Community Preservation Fund made it possible for the towns to buy land which contributed to preservation but also the rising costs of land. The ability to use some of these monies for clean water is an important step forward for the community.
There is universal agreement that there is a need for affordable housing in the Hamptons, not only for the obvious reason of providing shelter, but because of the needs of the community for school teachers, fire fighters, health care workers including doctors, to name a few. How do you see the real estate market responding to those needs?
We need it badly. Just observe the morning and afternoon trade parade traffic. A problem that cuts across rich and poor is that we just don't have the infrastructure to absorb more people.
Doctors we need to work in our hospitals can't find housing that they can afford and must drive long distances to get here. It's not just nurses and other health care workers. I think the Southampton College, now Stony Brook University
property, would be an ideal site for the inclusion of affordable housing, especially with Southampton Hospital
relocating there. It also has the benefit of the Long Island Rail Road Station being located there. Not only would it be an ideal location for affordable housing, but also special needs, the elderly for assisted living, as well as the interns who would need housing.
How would you get the community to focus on what seems to me to be something worth pursuing?
I think we should talk about it publicly, and involve the community as well as our public officials and investors to help undertake the project.
We would have to identify a local developer who would be attracted to doing something for the community in a cost effective way.
Sounds good. I would welcome the opportunity to be involved with you towards that end.
John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com