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December 2008


REAL ESTATE

Deeds & Don'ts
by Lily Oliver and Scoop Drummond

INSIDE STORIES BEHIND AREA REAL ESTATE DEALS

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GREENING THE EAST END
Hamptonians might soon view the world through green-colored glasses: The first 'green' custom-built luxury home just rose in Southampton Village. Slated to produce as much energy as it uses through a combination of alternative sources, the five-bedroom house features a geothermal pump, a 9-kw photovoltaic solar array and radiant floor heating. Other features: A roof made of recycled plastic soda bottles and flooring made from recycled wood, a mixture of materials from 50-year-old barns and bamboo. Paint and floor finishes are chemical-free and the swimming pool is solar-heated. Looking to reduce your carbon footprint? Look no further. The $4,350,000 property's listed with "Certified Eco-Broker" Catherine Bedard of Corcoran, (631) 702-9223.

CONNECTICUT ROUNDUP:
IT'S 2003 ALL OVER AGAIN.

According to reports from the National Association of Realtors' (NAR) annual convention in November, homes have not been this affordable since 2003—another way of saying that some gains made in housing prices over the past five years have been wiped out. Realtors are a glass-half-full bunch, and NAR brass chose to rally around how the improved "affordability indicators" might lure buyers to bid. NAR downplayed grimmer news, such as the report that 18 percent of American homeowners are "underwater," the term given to people whose mortgage debt exceeds the current estimated value of their property—a figure that rises to a shocking 56 percent in once-booming Nevada when considering people who secured their loans in the past five years.

But Connecticut is not Nevada. And throughout most of 2008, residential real estate in Connecticut held up relatively well under the many and diverse body blows dealt by the mortgage crisis and resulting foreclosures and tightening of the credit markets. Indeed, in the highest end of the luxury markets, mortgages are all but irrelevant, with cash deals the norm. "I haven't worked with a buyer who needed a mortgage in three years," says one Litchfield County broker whose properties are mostly vacation homes for New Yorkers.

Carolyn Klemm of Klemm Real Estate in Washington Depot says her region's Yankee prudence saves buyers from taking on more real estate than they can afford. "People here are not as leveraged. They're more old-fashioned. They're not driving a Rolls or wearing Manolos," says Klemm, who can reel off an impressive list of recent transactions, including the sale of former U.N. Ambassador Richard Holbrooke's home in Washington, Connecticut.

But as 2008 closes, the blow to Wall Street is hitting too close to home for Connecticut markets to remain unaffected. The financial industry employs many of those country-home owners and many, many Fairfield County residents. And, as layoffs and buy-outs continue—in publishing and advertising, as well—buyers simply aren't feeling job-secure enough to make offers, brokers say. People are shopping. They want to be in a position to bid when they think the time is right. They're sitting on the sidelines now. And sales volume is down some 30 percent in many Connecticut towns.

As optimists, Realtors prefer to view the current dearth of sales as pent-up demand. "I have buyers who've decided to rent for a while or wait it out in their too-small homes. They're out there. They'll come back," argues a Westport broker. Until they do, agents are as busy as ever—albeit in an unpaid way—keeping the leaves raked and pots of mums replenished, talking up new listings and even holding open houses. Here, a few new or otherwise notable properties on the Connecticut market.

Barn-Style Estate
Kent
$5,900,000

We love a barn with a backstory. And the tale behind this Kent farm starts with the area's literary and entertainment luminaries who bought the place in the 1980s, including Philip Roth, William Styron and Mike Nichols. Early preservationists, the men pooled their resources to save the land from development. Subsequent owners kept the 41 acres intact but tore down an old barn and built a glorious barn-like home in its place. Called Cobble Brook Farm, the circa-2001 residence retained a former silo, which now makes for a dramatic, 28-foot-high entry foyer. But the 6,000-square-foot home's most striking feature is the lofty great room, with its double-story ceilings and exposed beams, massive stone hearth and window walls with views over the gardens, pool and pasture land. The master suite is also cool, with its private, cantilevered screen porch that's suspended over a stream. Cobble Brook is listed with Roger Saucy of Klemm Real Estate in Washington Depot, CT, (860) 868-7313, ext. 22.

Grande Dame
Rowayton
$3,295,000

Back in the 1920s when the Bell Island enclave of Rowayton was not much more than a cluster of seasonal bungalows, this Victorian home was the grande dame, a shingled confection of gables, decks and wraparound porches, with views of the Long Island Sound.

Since then, the world has discovered the charms of Bell Island and its two private beaches, all within walking distance of idyllic Rowayton village and harbor, which is less than an hour's commute into Grand Central Terminal. And while trophy homes have replaced many of the modest beach bungalows, this circa-1920 lady is still taller than most and more charming than all of them put together. Her four full stories—and 3,287 square feet—have been renovated to include four bedrooms and four bathrooms (plus one half bathroom) on a lot that features a Bell Island rarity: a three-car garage. Liz Falsey of Wheeler Real Estate in Darien has the listing, (203) 856-4444.

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Hunt Club Colonial
Westport
$3,495,000

The Fairfield County Hunt Club is a pristine, posh sort of place that provides a perk to even those among us who have never ridden to the hounds: Its bucolic acreage is awfully pretty to look at. The neighborhoods that have grown up around the club benefit from its convenient location, as well. They're within walking distance of the elementary school, along tree-lined streets with real sidewalks. The Post Road shops are a few minutes drive away, as is the train station and Staples High School—newly named the best high school in the state.

Hard by the Hunt Club, the Sprucewood Lane cul-de-sac makes for a family-friendly kind of place. And this is your classic, white-clapboard and picket fence kind of home, large enough for the biggest of broods, with six bedrooms and six full bathrooms (plus two half bathrooms). Built by John Dumke of Sterling Building & Restoration, its prewar details set it apart from the typical developers' spec home. Our favorite features: the handcrafted mahogany entryway with its three-story staircase; the dining room and butler's pantry with a bar sink and wine fridge; and the master bedroom with its fireplace and luxe bathroom featuring a stone tub. It's listed with Elayne Landau of Westport Residential, (203) 222-9778.

Wilson Point Estate
$4,395,000

Hilltop Road on Wilson Point is a magnet for seafaring types. There's easy access to the Sound from the Wilson Point Beach Club, which admits all residents and plays host to annual coastal traditions such as lobster bakes and a New Year's Day Polar Bear Swim. The couple who commissioned architect Linda Banks some 15 years ago wanted nautical details throughout their home, as well. So Banks designed a lighthouse-shaped turret next to the main entrance that houses an interior staircase. Newel posts are also shaped like lighthouses and there's a seascape mural in a powder room. But nothing rivals the home's sweeping views of the Long Island Sound and the Thimble Islands. In all, this home has 6,545 square feet, four bedrooms and five full bathrooms (plus one half bathroom). It's listed with Bob Callahan of Wheeler Real Estate in Darien, (203) 656-6577.

Plumb Brook
Woodbury
$2.6 million

Woodbury is a setting that pleases country-home buyers who want more than the perfect peace of socked-away acreage. This Litchfield County town offers privacy, of course, but it's also the unofficial antiques capital of the state, with more than 30 dealers bustling along Main Street. This architect-designed home is just a few minutes from the town center but is sited on 12 secluded acres and at the end of a meandering driveway. Different from the typical, rustic New England farmhouses and saltboxes, this is an elegant home with Hamptons-style landscaping and pool. It has moments of drama throughout, from its glossy marble foyer and curved, floating staircase to its first-floor master suite with a fireplace and private deck. Built in 2003, Plumb Brook has 10,000 square feet and a total of five bedrooms and eight bathrooms (plus one half bathroom). Diane Stevens of Sotheby's International Realty in Washington Depot, has the listing, (860) 868-6902. —L.O.

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Scoop Drummond's
HAMPTONS ROUNDUP:

It's hardly surprising that the revelries of greed and avarice on Wall Street should converge on our idyllic shores in such a distinct chill, spiraling our local real estate values to a frigid pile of shingles.

Assets are in free-fall mode. But the psychological profile of the typical Hamptons homeseller is galling. Either they're in denial or they gloat, "I don't need to sell." To wit: Sellers either lower their asking price marginally or merely instruct their brokers to tell buyers, "We're negotiable."

If brokers try to offer an opinion of value, most sellers react as if listening to a speech meant for the dull, the drab and the poor.

Of course, there are some homeowners who must sell, even in the rarefied Hamptons, where the market tends to stagnate first and plunge later. Indeed prices have come down. But, I fear, they have much further to fall. We have seen 10 to 15 percent reductions, which have had little effect to jump-start the housing market here.

There is some skittish activity in the lowest end, which translates to houses in the $400,000 to $800,000 range. At any price, most of these houses are woebegone dwellings, in locations that no one really wants. Who's buying them? Not Europeans, as some brokers boast. Why would a well-heeled European travel thousands of miles to wind up on Fort Pond Boulevard? The brokers who handle these trades have learned their craft in the trenches, shuttling customers in rusty late-model cars. But they're making some money, whereas the elite group of East End house hawkers waits nervously for future big payoffs to resume.

In tough times like these, sellers have two choices: withdraw their property from the marketplace and wait for values to improve, or go with the flow and slash the asking price significantly.

Given that the Dow Jones Industrial Average has retreated to unreal valuations, should the Hamptons market do the same? If that occurred, prices would be slashed in half. What's $10 million now used to be $5 million in 2003-4. That scenario might be unlikely, but who knows? The stock market may rally—as it did in mid October—or fall, but the housing market is not about to recover from a few good days on Wall Street.

The Hamptons arena reeks of the marketplace, which can be a bazaar of variables beyond which any fathomable attempt of value is accidental. To be sure, pricing is not an exact science, hardly like preparing a cake with precise measurements. Instead, emotional components contribute to the assessment of a personal residence, whether it's a doublewide or a gilded, gated estate. At least investors have the tools of cap rate and net operating income as benchmarks to assess commercial property.

Some recent local sales, though, can still impress. In the realm of vacation properties, 20-something million dollar sales are still significant. Often written about in this column, the Towbin residence is a prime example of market breadth. On West End Road in East Hampton on 2.3 oceanfront acres, it has finally gone to contract at about 30 percent less than the asking price of $40 million that was set two years ago. As beachfront goes, this place was desirable: a prestigious location, good oceanfront and views, but ultimately it was a creakily dated, shingled habitation waiting for the bulldozer.

Another recent winner in the sales department was a ramshackle beachfront house in the Wainscott area. There the views were stunning over Wainscott Pond and the Atlantic Ocean. Set on three acres, it was the apocryphal sea shack with a front row seat to marvelous sunrises and sunsets. It's been on the market for nearly two years, first at $25 million and, most recently, $19 million. It has apparently sold for $17 million.

A bargain? That's a matter of opinion. The house is hard-pressed as a tear down because building restrictions, hemmed in by wetlands on all sides, are enormous. What's there is there! Adding a pool is probably impossible and any expansion is extremely limited. So a 3000-square-foot 1970s seaside aerie on three acres subject to significant beach erosion is an anathema. Still, it's an amazing spot, and economics had nothing to do with this purchase. It was purely subjective and emotional, a particular buyer's brave stance when the sky seems to be falling everywhere else.

In my opinion, the newest, currently one of the most egregious listings, to hit the market is an oceanfront residence on Lily Pond Lane in East Hampton. It's a monumental early 20th-century beach cottage that is architecturally significant. To me, it defies the notion of good location. It overlooks an extremely active beach and is perched dangerously close to the dune edge.

Offered in the $30 million range, I think it flouts the marketplace. Purchased 10 years ago for one-tenth of its current asking price, it is, in industry lingo, aggressively priced.

For the foreseeable future, the savvy buyer is looking for level-headed values in the Hamptons, a fleeting notion that may gain more ground.

Where this type of thinking puts most other houses in the Hamptons remains to be seen. The typical Sag Harbor Village vintage house, renovated and in a good location, typically sold for $2 to $3 million. Take at least 25 percent off that figure to reflect today's purchasing power.

Houses on secondary lanes in the other villages are not so compelling at present prices. Gone are the days of $3 million sales for a revamped 1950s ranch house on a third of an acre.

Spec houses in the hedge fund-heavy corridors of Bridgehampton and Sagaponack look to me to be somewhat moribund. Typical hedge fund-funded families will not be paying $10 to $12 million for this area's housing stock. These probably qualify for a discount of $2 million or more.

Southampton and East Hampton estate areas are under similar pricing pressures. To my mind, the $20 million-plus estate properties in these villages remain challenged. A good example is a rambling shingled cottage in the estate area of Southampton listed at about $20 million and, now, $16.9 million. It sold in 1997 for $4.75 million and was traded in 2006 to its current owner for close to $13 million. It went to contract in October but fell apart because the buyer couldn't get his financing. Back on the market, this estate property could turn out to be a smart buy at a competitive price.

Elsewhere the market under $10 million—that netherland of houses both north and south of the highway—seems hardest hit.

Eventually, perhaps sooner than later, buyers will return and be able to buy low and sell high instead of buying high and selling even higher. There will be some back-and-forth movement, a lot of spinning heads and dastardly deals. But if the past is prelude to the future, new highs will be back. It's the period between Hell and Heaven that's so uncertain!—S.D.

Editor's Note: Scoop's opinions do not reflect the view of C&G.

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