One of the strongest trends of the present market is the rapid sale of the best south-of-the-highway lots, renovation and tear-down properties in the “Farmlands” region between Wainscott and Water Mill.
Both of these properties are presently improved with houses that are likely to be torn down.
79 Parsonage is an oversized, 3.6-acre lot which currently houses a small, 1,200-square-foot cottage built in 1913. 385 Parsonage is a 1-acre flag lot and has a substantial 3,000-square-foot barn-style home built in the mid 1980s.
Although 385 is a teardown in Sagaponack, where extraordinarily large and complex traditional-style homes have become the norm, that house would be considered a lovely, graceful home almost anywhere else in the country.
Vacant lots and teardowns in this neighborhood have been selling in the range of $3 million to $4 million for 1-acre lots, with higher prices for larger lots—such as the 3.6-acre 79 Parsonage. Both of these transfers are right in line with current comparable sales.
One thing that distinguishes both of these lots, which is often overlooked by buyers, is that they are each on the southern side of the street. This is always an advantage in this climate, because a south-facing backyard allows for the construction of a house with lots of glass to let in the summer breezes, year-round sunlight, and fewer windows on the front to protect the owners’ privacy from the street and buffer the northerly winter winds.
Such houses can be further improved with thoughtful landscaping that accents this orientation, including evergreen trees and shrubs to block the road and cold to the north, and deciduous trees to the south that let in all of the winter light but provide shade on the house in the summer.
From a financial perspective, we have yet to see much premium put on the opportunity for the best solar orientation. Homes on the north side of streets are generally worth the same as those on the south side, perhaps because few buyers know the difference. But buyers who walk into homes with lots of sunny glass opening up to an inviting backyard tend to like it, even if they don’t understand that not every house offers that opportunity.
This beach house is located on the bay side of Dune Road, which runs along the ocean between Moriches Bay and the ocean below the Town of Southampton. The house was built in 1980 and is a simple beach house; 2,400 square feet with five bedrooms, 2½ baths and one fireplace.
The interior is utilitarian and dated, with paneled walls, carpeting and baseboard heating. But the house offers direct views over Moriches Bay to the rear and decks on the front look over Dune Road, across other houses and out to the ocean. The sale includes a right-of-way for ocean access.
This structure is worth little in terms of construction cost; perhaps $150 per square foot, or $360,000. With no additional improvements save a small driveway, this sale values this 1.5-acre lot at around $1,000,000.
But it is important to note that because this pre-existing home is here now, the buyers have the right to continue to use and maintain this 2,400-square-foot house, or build another similarly sized house, and this pre-existing right is very valuable. A similar lot, if vacant, might sell for less than $1 million, particularly if it did not include building permits, because of the zoning risk associated with obtaining permits to build on such an environmentally sensitive lot.
Buying a pre-existing house, even in poor condition, is a safer choice. But there is a special federal rule, unknown to many, that makes buying a renovation candidate in a highly exposed location such as Dune Road risky as well.
Federal flood regulations require that if an owner spends more than 50 percent of the value of the structure during renovations (in this case perhaps $180,000), the house must be elevated onto pilings that exceed the height of an expected 100-year flood as shown on FEMA flood maps. These pilings can extend more than 10 feet into the air.
For this reason, over time, expect to see more and more houses built on pilings in the Hamptons and beyond, changing the appearance of coastal neighborhoods forever.
This house is located in the Shinnecock Hills near the former Southampton College and the soon-to-be former Stony Brook Southampton campus. It is a 6,000-square-foot post modern on 1.8 acres.
The house was built in 2006, a year before the market top, and contains five bedrooms, 4½ baths, a finished basement and an attached two-car garage. Outside, there is a gunite pool, patio and masonry driveway.
Like many houses built on speculation before the crash, this house is dramatic and eye-catching, with lots of windows, a three-story entry, large lighting fixtures, interior columns, expansive bathrooms, unusual ceiling designs and lots of wood trim along walls, windows and doors.
The seller purchased the house in 2006 when it was completed for $3,150,000. This sale represents essentially a break-even proposition, not including considerable taxes, maintenance and insurance, and, of equal importance, the value of using and enjoying a large home in the Hamptons for four summer seasons rent-free.
This is the latest of many examples we have seen indicating that today’s prices are roughly the same as 2005 and 2006. Fortunately, prices have been stable at that level for over a year now in most markets, particularly south of the highway.
27east on Jan 10, 2011