Not only are price tags continually creeping upward in most segments of the market, the very highest end is flourishing, report the East End’s most successful agents. And though that rarified niche is unpredictable in many ways, demand for $50-million-and-up properties is healthier than it’s ever been, say Tim Davis of The Corcoran Group, Harald Grant of Sotheby’s International Realty and Cody Vichinsky of Bespoke Real Estate.
So why do recent reports continue to point to a dramatic downturn in the double-digit multimillion-dollar segment?
Analysts of late have been quick to cite weaker financial markets, shrinking return percentages and diminishing year-end bonuses on Wall Street as reasons for a much ballyhooed drop-off in luxury sales. The last two years of top 10 transactions have most especially been trotted out and compared.
But to report that the luxury real estate market is in slowdown mode is a misnomer, say Mr. Davis, Mr. Grant and Mr. Vichinsky. The fact of the matter is that the uppermost reaches have always been an anomaly in relation to the rest of the industry, and the numbers being compared right now don’t really tell the whole story.
Yes, it’s true that 2015’s top 10 sales tallied up to approximately 20 percent less than the chart-toppers of 2014—$35.5 million average price as opposed to $44.6 million. Yet that doesn’t mean that that the luxury micro-market is soft, the experts say. A single outlier sale, such as the record-braking $147 million transaction at 62 Further Lane in East Hampton in 2014, can skew the entire equation. That three-parcel transaction, between the estate of Andrew Gordon and hedge funder Barry Rosenstein, was almost triple that of the $57.3 million high water mark set in 2015, located down the road at the Freedman estate on 226 Further Lane.
This year’s biggest numbers are already off to a whopping start, thanks to the $110 million transaction of three parcels at 93, 97 and 101 Lily Pond Lane in East Hampton between hedge funder Scott Bommer and natural gas billionaire Michael Smith. That second-highest priced transaction in the Hamptons most likely won’t be the last double – or triple- digit sale, as wealthy buyers are flocking here in droves and looking to scoop up premium properties, say the top brokers.
Mr. Davis, The Corcoran Group’s Regional Brokerage Advisor for the East End and the number one agent on the East End in 2014 and 2015, according to the Wall Street Journal, has been working within the realm for decades. Not only is the 1-percent “buyer pool generally not affected by financial market volatility,” it’s hungry for Hamptons properties, he reports.
“There is very little or no inventory,” says Mr. Davis, who is currently representing the $48 million Normandy House on First Neck Lane in Southampton. “There is a market with buyers waiting for this product.”
Mr. Grant, a Senior Global Real Estate Advisor and Associate Broker with Sotheby’s International Realty who has been cited by the Wall Street Journal as the number one agent for individual sales volume for several years, agrees. His current premium listings include the $49 million Angel View on Bay View Court in Sag Harbor and $45 million Twin Peaks on Old Towne Lane in Southampton.
“There aren’t that many of these places available right now, but there is always a buyer at the ready for these trophy spots,” he says. “Not only is there intense interest right now, triple-A properties that are priced right sell fast.”
The regular rules don’t really apply in a place where everyone wants to be and at a level where money isn’t really an issue, says Mr. Vichinsky, who co-founded Bespoke Real Estate with his brother, Zach Vichinsky, in 2014 in order to fully service the $10-million-and-up niche.
“It’s hard to compare the Hamptons to other luxury markets because the rules are different here,” he says. “And even though we’ve got sellers who don’t need to sell and buyers who don’t need to buy … the demand and desire to be here is as great as I’ve ever seen it, even as inventory levels are relatively low.”
Addressing the questions raised about über expensive properties languishing on the market, the three brokers agreed that although prime properties that are priced right usually get snatched up quickly, it’s not uncommon for the priciest listings to stay available for lengthier spans than mid- and higher-range single-family homes. The unpredictable absorption rate makes sense to those who understand that the buyer pool is considerably smaller for double and triple-digit million properties than it would be for those being bought and sold for $9 million and less.
Pinpointing the future for those properties at the apex of the East End real estate market is impossible, says Mr. Vichinsky, who is representing a $59.9 million new construction project south of the highway in Sagaponack. But, he adds, he’s got total confidence in the overall scheme of things here in the land of plenty.
“Luxury real estate is one of the only assets with such a great degree of appreciation,” he says. “It’s one of the best possible safety deposit boxes on the planet.”