This Long Island village and other privileged enclaves have weathered the real estate crisis better than most small communities
As recently as the 1970s, the little village of Sagaponack in New York’s Long Island was little more than a stretch of dusty potato farms connecting the relatively plutocratic communities of East Hampton and Southampton. In addition to indigenous farmers, it was home to such writers as George Plimpton and Kurt Vonnegut, who were happy to take advantage of its low real estate prices, laid-back charm, and easy access to the Atlantic Ocean.
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The ocean is still there, even if it’s harder to access. But the days of low real estate prices and laid-back charm are long past. Thanks to wealthy home buyers such as Renco Group Chairman Ira Rennert, who built a controversial 29-bedroom mansion on 63 acres there in 2004, Sagaponack has morphed from a quiet backwater into the most expensive small town in America. The New York Times in 2004 estimated Rennert’s mansion, Fair Field, to be worth more than $170 million.
In 2009 the median home sale price in Sagaponack was $4,421,458, according to real estate site Zillow.com. The median home price in the U.S. last year fell to $174,100, according to the National Association of Realtors.
Sagaponack is not the only rarefied real estate market, no matter how poorly the country’s housing market is doing. Long Island’s two counties, Nassau and Suffolk (where Sagaponack is located) account for more than half of the 50 most expensive small towns in America. Nearby Water Mill (No.6) and Bridgehampton (No. 8) command median sale prices of $2,238,676 and $2,081,717, respectively.
Prices in a Few Top-50 Towns Rose
While Long Island may win honors for hosting the most concentrated cluster of high-priced homes in the U.S., it is not alone in attracting super-rich buyers. Jupiter Island, Fla., home to Fields, Fords, and other old-money families, as well as newer wealth such as golfer Tiger Woods, is the U.S.’s second-most expensive small town, with a median sale price of $3,620,310.
Jupiter Island is also one of a few communities that saw prices rise last year. Zillow.com estimates that prices there climbed 19.4% in 2009, while average sale prices elsewhere were falling by as much as 80%, according to NAR. Some additional top small towns (those with a population of 10,000 or less) saw an increase, with further gainers including Los Altos Hills (No.4) and Woodside (No.7), both in California, and Wainscott, N.Y. (No. 13).
The median decrease in home value across the country’s 50 most expensive towns in November 2009 was -5.4%, compared to -5% nationally. “Home sales volume reached a low point in early 2009 and I think [it] will continue to increase or stay flat,” says Stan Humphries, Zillow’s chief economist.
Wealthy homeowners may be in for good news in 2010: NAR’s monthly data shows that home sales in all price ranges nationwide showed year-on-year increases in November. Sales of homes costing more than $1 million increased in every region but the Midwest. They represented 1.1% of total sales.
2009: “Nerve-Racking for Everyone”
If Wall Street’s bonus season is as generous as many expect, the Hamptons should be primed for a buying surge. Marilyn Clark, an agent for Sotheby’s International Realty, says that in the past four to five months, activity in Sagaponack has rebounded for both homes and land sales, ranging from oceanfront homes and historic homes to new construction and parcels of vacant land. “During the early part of 2009 when everyone was more uncertain about the economy, there were price adjustments, but since the Sagaponack market has proved strong, prices are currently holding,” Clark writes in an e-mail.
In Hunts Point, Wash., the country’s third-most expensive small town, a property’s average time in the market jumped to 149 days, from 83 days before the recession, estimates Randi Brazen, co-owner of Brazen Sotheby’s International Realty in Bellevue, Wash. While home prices in the area have fallen more than 20% in some cases, Brazen says they typically hold their value in the long term because few are available in a region that remains attractive to the rich.
Saying that 2009 was “nerve-racking for everyone,” Brazen expects the real estate market in Hunts Point to rebound as employment opportunities in nearby Seattle improve. “That doesn’t mean prices will snap back up, but it will stop the downward spiral we’ve seen in the past year and a half,” she says.
In Sagaponack, Jupiter Island, and America’s other most expensive small towns, it seems that wealthy homeowners can look forward to even higher prices down the road.
Top 5 Most Expensive Small Towns
1. Sagaponack, N.Y.
2. Jupiter Island, Fla.
3. Hunts Point, Wash.
4. Los Altos Hills, Calif.
5. Fairbanks Ranch, Calif.
Click here to see the full list of the 50 Most Expensive Small Towns in America.