Madoff May Have Burst the Hamptons Bubble

The death of the Hamptons has been prophesied almost as long as there has been a group of villages on the East End of Long Island that New Yorkers collectively agreed upon referring to as the Hamptons — maybe say, since about the time Good Ground changed its name to Hampton Bays in 1922 to capitalize on the brand-name housing boom. They probably even said it before that, when William Merritt Chase set up painting classes on Southampton dunes in the late 1800s. And the Shinnecock tribe would have said it far before that, if only they had used the name.

Well, the end, in one form or another, might soon be here. At least if you ask Dottie Herman, CEO of Prudential Douglas Elliman. A new report from the real estate giant and Miller Samuel, a real estate appraisal company, delivers the sad news that there were more than 41 percent less sales in the last three months of 2008 than the year before and 11 percent more properties listed. And as the Observer points out, those deals were likely negotiated in the relatively rosier climate of the three months before that. Maybe sellers can just hope that global warming, rising sea-level and beach erosion washes all the ocean-front mansions out to sea so they can collect on the insurance money.

If you took only the Madoff money out of the Hamptons market — that is, add a listing and strike a sale for every wrinkled old-money heiress pawning the family heirlooms — and you'd have, in the parlance of our times, an epic fail. As we know, the situation is much worse than that. How long till every mansion starts looking like the Bouvier Beale house in "Grey Gardens"? But look on the bright side, those absurd rental prices are probably heading in the same direction as the Dow.

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