Bridgehampton South Report – 2Q 2010

The following properties transferred in Bridgehampton South of the Highway in 2Q 2010:

40 Williams Way, $1,785,000

129 Halsey Lane, $1,500,000

449 Ocean Road, $5,200,000

11 West Pond Drive, $5,900,000

584 Pauls Lane, $2,675,000

61 Newlight Lane, $3,850,000

29 Jobs Lane, $3,310,000

265 Meadowlark Lane, $3,900,000

Average Price:$3,515,000

Median Price:$3,580,000

Notable Sales From my Weekly "Transaction Highlights" column:

449 Ocean Road, Bridgehampton (Vacant) $5,200,000

This 2-acre vacant lot is part of what was once a 26-acre parcel in Bridgehampton, south of the highway about midway between the village center and the ocean. The entire parcel was subdivided into six approximately 2-acre lots, with 13-acre reserve, and sold in 2005 for $12 million.

Seller purchased this 2-acre lot in May of 2007 at the height of the market for $3,750,000. This sale, almost exactly three years later, represents an excellent compounded annual return of over 11 percent.

This recent transaction is yet another piece of data suggesting that while homes dropped in value by approximately 30 percent during the crash, land in the most desirable areas, because of its scarcity, held or increased in value through the crash. As a pure investment vehicle, it appears in many cases that purchasing raw land is superior to buying a home.

In addition to the likelihood of appreciation, there is no maintenance and taxes are low. But land cannot be easily leveraged through the mortgage market, presents a re-zoning risk in some cases that can result in devaluation and does not offer its owner use and enjoyment while it is held.

265 Meadowlark Lane, 
Bridgehampton, $3,900,000

This 1-acre lot, located a block from the ocean in an excellent neighborhood, is square and flat. There is an aging, contemporary 3,000-square-foot, four-bedroom house on the property, which was built in 1982.

Under current zoning, this lot can support a 10,000-square-foot house with pool and pool house; a second story would provide a view of the ocean and Sagg Pond. The existing house is almost certain to be torn down, so this sale was essentially a land transfer. And like all land transfers, this is a critical piece of valuation information that affects all the home values in its area.

The sellers paid $3,140,000 in 2006 near the 2007 market high. Although home values have declined since 2006, this transfer is yet another example of the clear trend that high quality land, due to its scarcity, has held or increased in value through the crash. In addition, the increasing sales of land and teardowns in excellent neighborhoods indicates that the building cycle is beginning anew and buyers expect market values in the best areas to increase.