Summary
As similar to the late 80's downturn, it is expected that real estate values in the Hamptons (and Manhattan) will not see significant reduction loss, but will remain flat for a period of time. The difference between the late 80's and today is that both the US Fed and the G7 are committed to getting in front of this downturn and managing the variables until growth returns. Sure, you can be bear-ish. Do a rain dance liong enough and it will rain, but I believe that now is the time to strike and make the best deal you can for the property you want. I don't see values dropping signifigantly in Manhattan and the Hamptons.
Analysis
Many love to paint with a broad brush. I have listened to "bears" tell me that Hamptons real estate was going to crash for the past 10 years. Wall Street "wonders" who have left 100, 200 300% appreciation on the table, convinced that "things can't continue to appreciate...guess what? Wishful thinking. Wall Street real estate Wisdon - does not equal- Hamptons Real Estate Wisdom. Let's make a deal...If I'm going to invest in commodities or funds, I'll come to you....if you're going to invest in Hamptons Real Estate, come to me.
Today, while values have dropped 10, 20 40 even 50 % in some markets in California, Florida, Las Vegas and Michigan, values in the Hamptons and Manhattan have maintained in many cases.
Sure, if your in a fix and you need/must/have to sell you property, you're might 'take a hit'. What's a 'hit'? A recent sale of mine was for a waterfront house in Shelter Island bought in 2003 for $1,350,000 and was listed at $2,600,000 for 6 months, then reduced to $2,250,000 then $2,150,00, then $1,895,000. The sales price was $1,875,000. So, in this 'distressed market' the seller only made a 39% return on his 2003 investment - horrors!!!!
Sorry if this sounds sarcastic, but, it's being said that this market is "more psychological than anything". Fear is gripping and illogical. I think Warren Buffet will prove to be right in the medium and long term here. "Be fearful when others are greedy and greedy when other are fearful".
Right now, others are fearful...you decide.
Michael Daly
True North Realty Associates
Buyers Brokerage for the Hamptons
631 725 0554
www.beachamptons.com
