This weekend's "Key" supplement to the New York Times (can you believe that one still exists?) has a very disheartening story about the real-estate market out in the Hamptons. There are tons of properties on the market, owners are being forced to slash prices, and developers who built luxury homes on spec -- usually a sure thing out East -- are getting left with overwrought, oversize mansions on their hands right and left. There are three examples in the story that got us really worried. Here's one:
According to data collected by the Suffolk Research Service, a local real estate data company, the number of sales in 2008 fell by 25 percent in East Hampton, 39 percent in Bridgehampton, 45 percent in Southampton and 47 percent in Montauk.
Near the end of the story, the writer found an object lesson:
A home with a $1.5 million mortgage, and recently foreclosed, was going up for auction. As I waited for the proceeding to begin, I met the wife of the home's owner, a real estate broker, who looked on sadly as a referee, Charles D'Onofrio III, read out the terms of the sale and asked, "Are there any bids?" The only other person on the steps, a representative of the bank, offered the token sum of $500. "Sold," the referee barked.
Double yipes! And then this, by far the worst anecdote, cut us to the bone:
Even John Paulson, the hedge-fund manager who made billions by betting against the housing bubble, seems to have timed his Hamptons moves poorly. Last year, after buying himself a new $41.3 million estate, he put his old place in Southampton -- advertised as a 6,800-square-foot "cottage" -- on the market for $19.5 million. He has since cut more than $5 million from his asking price.