From the splashy beaches of the Hamptons to the rolling hills of the Berkshires, the vacation home markets popular with New Yorkers have been hit hard by the downturn.
But as the 2010 summer season gears up, reports indicate that things are turning around as the economy stabilizes and the threat of rising interest rates brings more buyers out of the woodwork.
This month, The Real Deal examined eight vacation home markets around the region. Of those, the South Fork of Long Island and Martha’s Vineyard, Mass., show the sharpest recent rebounds in sales.
Rental figures are harder to come by, but anecdotally brokers across the eight markets said early leasing is up this year, while prices in most places are still below peak. This means last year’s rock-bottom deals will be harder to come by in low-inventory places like Fire Island, which brokers said they expect to be fully booked. However, in other areas, like the Berkshires, there are more rentals available as for-sale listings languish on the market.
In general, the tea leaves indicate that this summer might be the last to make that unbelievable deal. Below is a rundown of the region.
2009 median sales price: $209,000
Percent change from 2008: -13%
Percent change from 2007: -18%
Real estate prices continue to inch downward in Ulster County, one of four counties that make up the area known as the Catskills (pictured), known for its mountainous vistas and quaint towns likeWoodstock and Kingston. In February, the median sales price was $207,000, compared to last year’s overall median of $209,000.
The lower prices, along with the Obama administration’s homebuyer tax credits, have brought more middle-class buyers from the city back into the market, said Tim Sweeney, a partner at Prudential Nutshell Realty. “For the first time in a year and a half, I am hearing people say, ‘I want to be close to a bus stop,'” he said. This has made homes in the center of towns more popular.
He said rentals aren’t as big in the Catskills, offering little help to struggling home-owners. “We had numerous sellers last year who wanted to rent to alleviate the hit of their mortgage payments. That didn’t work very well because we don’t have a lot of [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][seasonal] renters,” said Sweeney. “The bed-and-breakfasts do very well.”
Source: Median sales price for Ulster County from the NYS Association of Realtors
2009 median sales price: $173,000
Percent change from 2008: -8%
Percent change from 2007: -18%
Once an exclusive summer colony for New York’s wealthiest, home prices have fallen inMassachusetts’ hilly Berkshire County in recent years. The median sales price in 2009 was exactly the same as in 2004 — $173,000 — yet the number of yearly purchases plummeted 39 percent during the same time. Sellers are willing to cut deals or rent out their homes while they sit on the market, said Paul Harsch of Harsch Associates. He has one sprawling estate just outside of Great Barrington listed for $2.25 million, 23 percent less than its original price four years ago (pictured). The owner is also willing to rent it during July and August for a total of $22,000.
On the other end of the spectrum, Harsch said less-wealthy New Yorkers have been attracted to vacation or even primary homes, like a 3,000-square-foot Victorian with servants’ quarters, built in Pittsfield for a distinguished Civil War general, and listed for only $195,000.
Source: Median sales price for Berkshire County from the Warren Group
2009 median sales price: $315,000
Percent change from 2008: -6%
Percent change from 2007: -18%
Although housing prices on this sandy peninsula off Massachusetts had steadily dropped since at least 2005, brokers say the market freeze has started to thaw. In March, “sales were up 65 percent from February, and 26 percent from the previous March,” said Lynette Helms, president of the Cape Cod and Islands Association of Realtors.
Meanwhile, she said, the number of summer rental bookings was down roughly 5 percent during the first quarter of this year compared to last year, although activity increased in April. Helms noted that people are still looking for bargains. “Three years ago, people wanted the oceanfront, or a home with all the amenities. Today, they’re scaling back. The biggest trend is to the larger properties where several families can vacation together.”
In response, she said, the owners of more luxurious properties are lowering their prices. Last year her firm, Real Estate Associates on the Upper Cape, listed a five-bedroom mansion with 360 feet of private beach frontage for $6,500 a week. The home (pictured) didn’t rent. This year, the owners dropped the price to $5,500.
Source: Median sales price for Barnstable County from the Warren Group
2009 median sales price: $592,500
Percent change from 2008: -9%
Percent change from 2007: -15%
Dukes County, consisting of Martha’s Vineyard and the tiny Elizabeth Islands, most of which are owned by the Forbes family, has seen one of the sharpest housing price rebounds in Massachusetts. According to the Warren Group, the median sales price in February was $688,000 — 64 percent higher than it was a year earlier.
Real estate prices on the island, accessible only by aircraft or ferry, have been somewhat buoyed by exclusivity and scarcity, with only 13 sales during February. “It’s quiet, and all the buyers are making low offers,” said Rob Kendall, owner of Kendall & Kendall Real Estate. But, he said, since many of the properties are inherited, their wealthy owners are in no hurry to sell. “We have about $10 million in offers out right now that are just not going anywhere.”
Landlords who depend on summer renters are dropping prices, however, said Patty Kendall, head of the firm’s rental division. Homes generally rent for between $5,000 and $40,000 a week, with prices 15 percent off from their peak. For example, she said, one Chilmark estate with a tennis court and pool (pictured) rented for $16,000 per week in the past, but this year the asking rent is around $13,000.
Source: Median sales price for Dukes County from the Warren Group
Long Beach Island
2009 average sales price: $851,000
Percent change from 2008: -13%
Percent change from 2007: -12%
Long Beach Island, a primarily family-oriented summer colony along the Jersey Shore, saw a significant rebound in average sales price last quarter, to $941,470 compared to $851,000 last year. (Median sales data wasn’t available for the 18-mile-long barrier island. Averages tend to be higher than medians, which might make this market look disproportionately costlier than others.)
David Cowles, an agent with Prudential Zack Shore Properties, represented a family that tracked an ocean-adjacent Beach Haven bungalow (pictured) for a year before finally buying it — after the seller dropped the price by $550,000, to $1.4 million.
“It was their perception that the price wasn’t going to get any lower, and that somebody else was going to buy it,” said Cowles.
Rental activity increased nominally this season, with more people interested in properties under $5,000 a week, said leasing agent Donna Diorio of Prudential. She said her clients “may look to spend a little less, but they can’t give up that vacation totally.”
Source: New Jersey MLS data compiled by Prudential Zack Shore Properties
2009 median sales price: $690,000
Percent change from 2008: -2%
Percent change from 2007: -11%
New York’s 31-mile-long Fire Island — inaccessible to cars during the summer and to the postal service year-round — weathered the housing crash better than the East End. Prices fell only 11 percent between 2007 and 2009, and prices appear to have inched upward recently (although with fewer than 5,000 homes on the island and few sales, trends are admittedly hard to pin down).
Carin Roth, head of Fire Island Real Estate, said renters are more confident this summer than last. “Last year, my old Wall Street clients were saying things like, ‘I think the world is going to end,'” which meant fewer expensive season-long rentals. “This year, people are looking for the full summer again.”
Since there are so few homes, Roth said sellers are generally slower to lower prices than in other markets. She has a newly constructed five-bedroom house in Ocean Beach (pictured) that’s been on the market for two years, asking $2.3 million. The seller will hold out until he gets his price, because “his house is the only oceanfront for sale for a couple of miles,” explained Roth.
Source: Median sales price from Long Island Real Estate Report
2009 median sales price: $810,000
Percent change from 2008: -7%
Percent change from 2007: -14%
The Hamptons and Montauk saw a stunning recovery in housing prices and activity last quarter. There were 466 sales recorded, at an average of $1.7 million during the first quarter of 2010, compared to 208 sales averaging $1.5 million during the first quarter of 2009, according to Corcoran.
But storm clouds are brewing. A shocking 6,396 home-owners on the South Fork are 30 to 90 days delinquent paying their mortgage, and 83 percent of those homeowners are in some stage of bankruptcy, said John Brady, a Prudential Douglas Elliman broker who specializes in short sales. Brady commissioned the data from the credit rating firm Equifax to help identify potential clients.
He has a newly constructed East Hampton mansion (pictured), originally listed in 2005 at $5.7 million, now listed for $3.9 million. He’s negotiating with four lien holders to accept an even lower price.
Source: Median sales price from StreetEasy
2009 median sales price: $347,500
Percent change from 2008: -25%
Percent change from 2007: -26%
Housing prices on the North Fork — the less expensive and more rural version of its flashy Long Island neighbor the Hamptons — have fallen so much since the economic crash that they’re lower than they were in 2005. According to StreetEasy, the median sales price for a home there last quarter was $335,000, compared to $417,000 during the first quarter of 2005. Transactions have dwindled in comparison as well, from 229 to 30, although not all were recorded by press time.
Still, Corcoran’s Sheri Winter Clarry said more buyers have been looking to close deals lately before interest rates rise. And, she said, the summer rental market is faring better this year, with the return of the season-long rental. Rental prices, meanwhile, are down from their peak by around 15 percent.
The North Fork continues to attract budget-conscious South Forkers. That has given rise to one notable trend — “More than half of my clients are asking for pools now,” Clarry said. The owner of a three-bedroom Cutchogue home (pictured), like others, installed a pool in response. The home was also listed for sale last summer; the price has since dropped by $100,000, to $1.175 million.