Amagansett Dunes Report – 2Q 2010

There were three sales in the Amagansett Dunes in the second quarter of 2010 (compared with four during the prior quarter).  Overall, sales volume in the Hamptons was up about 20% over the prior quarter and about 90% over the same quarter last year.

Interestingly, all three sales in the Dunes this quarter were on Marine Boulevard, including one on the Ocean, which pushed the average and median prices way up this quarter.  Last quarter the average and median prices were around $1.8 Million which is representative of most houses in the Dunes.

The current quarterly reports for all Hamptons areas show prices in the Hamptons rising, but this is a distortion based upon the increased level of high-end buying which has driven the average and median price calculations up in many markets over last year.  Prices in the Hamptons have largely stabilized, including in the Dunes.  Improved market conditions are attracting new sellers, and the financial markets are now strong enough to generate new buyers, so I expect that going forward there will be a rough balance between supply and demand and well-priced homes will sell relatively quickly.

The following properties transferred in the Amagansett Dunes in the 2Q 2010:

138 Marine Boulevard, $1,750,000

55 Marine Boulevard, $6,300,000

110 Marine Boulevard, $2,200,000

Average Price:$3,416,666

Median Price:$2,200,000

Notable Sales From my Weekly "Transaction Highlights" column in the Southampton and East Hampton Press:

138 Marine Boulevard.  One of the best real estate investments I have analyzed for my transaction highlights column.  Here it is:

This 1,300 square foot beach cottage with 3 bedrooms and fireplace on .23 acres is located on the best street in the Amagansett Dunes directly across the street from ocean-front homes.  The cottage was built in 1960, and although today's environmental regulations prohibit expansion of the footprint, it has a one car garage and basement that could be converted to living space.   There are virtually no grounds here, just a small front yard and rear patio.  Seller purchased this home in 1992 for $80,000.  This sale represents an enormous compounded annual return of almost 19%, triple the 6.5% national average, and property taxes and maintenance on this small home are likely to be exceptionally low.  This sale is a classic example of the axiom that location is everything in real estate investing, and illustrates the enduring desirability and value of property near the ocean.

55 Marine Boulevard, Amagansett, $6,300,000

This oceanfront home in the Amagansett Dunes is sited on an excellent lot; .67 acres, much of it already cleared, with 110 feet of direct beach frontage.  The house was built in 1973 and, at 4,000 square feet it is large for the Dunes neighborhood.  Presently the house has 3 bedrooms, and although it is almost 40 years old, it is in excellent condition and contains an expansive cathederal-ceiling living and dining area with fireplace overlooking the Ocean.  Although the house does not have a swimming pool, because the lot is fairly large and already substantially cleared, installation of a pool should be possible even though present day environmental standards make it extremely difficult to construct pools in the Amagansett Dunes, particularly on Oceanfront parcels.  Seller purchased this house in 2006 at the height of the market for $5,125,000.  Since that time, the financial markets, and its derivative, the Hamptons real estate market, have declined by about 30%.  This is a rare example of a home that appreciated during the same period of time by about 5% compounded annually, which is especially dramatic in comparison to the devaluation of many other homes during the same period.  The pattern we are beginning to see is that the rarest properties – high quality waterfront in this case and some land in others – have fared best in the down market.  When supply is extraordinarily limited, it seems there will always be sufficient demand to support or even raise prices.