This cottage-style classic was built around 1906. It is approximately 5,000 square feet with five bedrooms. The house is located on 2.12 acres on Sagg Pond, with 275 feet of pond frontage and views of the ocean beyond. Additional amenities include a gunite pool, spa, and pool house with sauna, separate staff apartment and garage. This home was in the same ownership since 1977, and historic structures such as this one are difficult to evaluate on a per-square-foot basis. But using round numbers, the house could easily be worth $500 per square foot, plus an additional $1 million for landscape, patio, pool, and pool house, for a total improvements value of $3.5 million and a land value of $12.7 million.
Looking back over the waterfront data for the year, there have been very few notable pondfront sales in 2010. Last quarter, the only significant pondfront sale was 117 Duck Pond Lane, Southampton, which sold for $7.8 million on Wickapogue Pond. The prior quarter, 76 Mill Pond Lane in Water Mill was the only good pondfront sale at $3.5 million. In the first quarter of this year, there was also only one notable pondfront sale, 9 Morgan Hill Way on Kellis Pond in Bridgehampton, for $11.1 million. For comparison purposes, during the first three quarters of this year, there were more than 10 oceanfront sales, and many more on the bay.
What accounts for the dearth of pondfront sales this year? Is it simply a function of the lack of pondfront inventory relative to other waterfront opportunities? Have homes on ponds fallen out of fashion? Are reduced prices allowing more people access to oceanfront homes? Are pondfront sellers unrealistic about the value of their properties (this property, 229 Quimby Lane, was initially offered for $30 million last year)? With so few sales, it is hard to tell what is happening at pondfront properties, and the lack of sales themselves may be interfering with the market. Nature abhors a vacuum and a lack of accurate information creates a space that buyers and sellers can fill with their own unrealistic fantasies about what homes may be worth. There is data available to fill that space – data that might be used to bring sellers down and buyers up and make deals possible – but it requires comparing different kinds of sales across geographic areas, as well as over time, with adjustments for changing market conditions.
This 0.59-acre lot is located just outside the borders of the Village of East Hampton, in an area local realtors call “Village Fringe” for lack of a better term. There seems to be little or no difference, in terms of property values, between being in the village and on the fringe. But there are two benefits of being in the village—a free village beach sticker and slightly lower property taxes.
This lot was purchased by the sellers in 1979, around the time that Gould Street was being opened from a narrow trail that traversed an old field on the edge of more established village streets. When it was first opened, it wasn’t particularly attractive. It was improved with ordinary suburban-style homes and, like all new streets, there was no mature landscaping. But today, Gould is charming and established, with street trees and well-kept homes.
Like all land transfers, this sale is extremely important as it provides an important data point that is the foundation of the value of all the homes around it. If a 0.59 acre lot on Gould Street is worth around $925,000, then the typical 3,000-square-foot home on Gould, at $300 per square foot, should be worth somewhere around $2 million, or somewhat less if located on a smaller lot, which is often the case on this street.
This Cape Cod-style home is located within walking distance of the water on a street that terminates at a sandy beach fronting Moriches Bay. The neighborhood is a mixture of full-time and second-home residences, with some large estates nearby. The house has an open floor plan with one living/kitchen/dining area, three bedrooms and two baths. The lot is approximately ½ acre, and the house is not quite 2,000 square feet. There is a one car attached garage, and outside there is a vinyl pool with a surrounding deck. At $225 per square foot, plus $50,000 for the pool, deck and landscape, the improvements here might be valued at around $450,000, leaving $235,000 as the land value. This is inexpensive in comparison to much higher land values often found in the Hamptons. But it is still extraordinarily expensive compared to the typical home in the United States, which at this time is around $235,000—the value of the land alone in this case.
There are other neighborhoods in Southampton and East Hampton where lot prices are similar, and in those neighborhoods, prices are still falling. In the end, housing market prices are derivative of the broader economic markets, particularly the average salary in a particular neighborhood. For homes to be affordable, there must be a reasonable relationship between income and housing prices. And except for the bubble years, this relationship was all important to qualify for a housing loan. In neighborhoods such as this one, and others in the Hamptons where there are many year-round owners, prospective buyers and sellers need to be well-informed about the local economy as it will ultimately determine whether home prices in those neighborhoods rise or fall.
27east on Nov 15, 2010