DAN'S PAPERS, April 30, 2010 Page 28 www.danshamptons.com
Has the “Rent Don’t Buy” Adage Shifted? By T.J. Clemente For a few years now, and up until very recently, there was a Greek Chorus of advice givers chanting, “Rent—don’t buy. Preserve equity by renting in an unstable falling home market.” The idea was that spending even up to $60,000 annually on rent was smarter than buying and watching the home lose $100,000 or more in value over the course of that year. The market was in a freefall—you could see it on the faces of homeowners across the East End, if not across the country. Voices of reason in the darkest hours, like that of Bridgehampton National Bank CEO and President Kevin O’Connor, knew that property here, with its proximity to, as he called it, “that ocean with those beaches,” had intrinsic value that would once again stabilize the local market and become attractive to the smartest money. Now he has more than a few others in his court. I spoke with Charles Paulos, First V.P. of Investment, for Merrill Lynch Global Wealth Management, who has 30-plus years of experience, about this topic. Last year, Paulos said, “The consumer would have to eventually come back.” He called it, “Pent up consumption, the need to buy a car to replace the old one that needed to be replaced.” He said back then that people in the right life stage would eventually buy their first home when things settled down. Everyone had needs but they were holding off purchases because of the uncertainty of events on the world economic stage. After all, it was
toxic mortgage derivatives (sold worldwide largely to people who overpaid for houses they couldn’t afford) that made the world go into a global “cold turkey.” All activity stopped. Cars were not sold, clothing sales stopped. Almost all retail sales stood still and in real estate, the dearth of activity was premise to the notion that home prices would tumble—in most cases below their mortgage levels—and be “under water,” the phrase meaning the home has negative equity. Paulos is now saying, “The rule is: A big increase in activity marks the bottom in all markets. Markets overreact, and then they stabilize. This is the best time to buy a home because interest rates can only go up, and they will. The over-leveraged players have been weeded out of the playing field and now, with due diligence, attractive mortgages are available for qualified buyers.” Paulos then used the Wall Street expression, “Homes are moving into stronger hands, thus causing stability.” He further advised that you should always buy at the bottom of any market and sell at the top. He reiterated we are now beginning to bounce off the bottom, moving upward with new housing starts, sales and first time buyer sales on the rise. He acknowledged that the expiring (as of this week) federal tax incentives helped the first time buyer, but he laughed, “No one is going to buy a home falling in value to get a tax incentive, but that is no longer the case. Homes are holding their values, and choice ones are rising again.”
Paulos predicted that, a few years from now, people will talk about this time as “the time I wish I had been smart enough to buy.” That resonates with me, the one who turned down the initial offering of Microsoft at $10 a share in the early 1970s, as I asked my broker, “Why would IBM need to buy software from anyone?” Triple ouch, four times over. Back to Hamptons real estate. Recent 2010 First Quarter results posted by Town & Country and the Corcoran Group show huge increases in activity across the board. On the North Fork the volume of activity in the Q1 2010 increased by 77%. On the South Fork (Westhampton/Quogue including Shelter Island to Montauk), Q1 sales were up 124%. These numbers give statistical credence to Paulos’ point that “increased activity marks the end of finding the market’s bottom.” In most of the hamlets on the East End, the median price of homes is also on the rise. On the South Fork the that number went up a healthy 46% (to $950,000). On the North Fork the increase was a more modest 8%. So once again it’s time to buy and not rent and build equity. No longer does it make sense to spend $2,500 – $8,000 per month to rent now that home values are once again on solid ground poised to rise, slowly but firmly. Remember, Charles Paulos has sold Wall Street investment products for over 30 years, and has no vested interest in real estate transactions in the Hamptons. Yet his advice stands: “Now is the time to buy a home.”
EVERYTHING OVER A MILLION Sales Reported as of 04/23/2010 BRIDGEHAMPTON
SOUTHAMPTON
Robert & Linda Leahy to Stephen F Bello, 40 Williams Way, 1,785,000
Alan & Marla Helene to Bruce Lewin, Channel Pond Court, 5,250,000
EAST HAMPTON
Joseph J Snellenburg (Referee) to HSBC Bank, 1130 North Sea Road, 2,303,887
Joan E Bennett Trust to Kenneth & Judith Reiss, Driftwood Lane, 1,050,000
HAMPTON BAYS
Jeff Lignelli to 22 Captains Neck Lane LLC, 22 Captains Neck Lane, 5,425,000
WATER MILL
Mollod Properties LLC to Lior Blik, 58 West Tiana Road, 1,537,500
E356 Cobb Road LLC to Cobb Road House LLC, Cobb Road, 3,000,000
NORTH HAVEN
Amy & Andrew McKnight to Dennis S Hersch, 24 Rosewood Court, 1,850,000
5 Seely Lane LLC to Tige Stading, 5 Seely Lane, 2,900,000
Kimberley & Scott Foster to Troy & Keisha Dixon, 150 Water Mill Towd Rd., 1,350,000
SHELTER ISLAND
EAbigail Free-Tanen to Cob Isle Waterfront LLC, Cobb Isle Road, 1,100,000
Stephen Houston to Joshua & Ilana Levine, 2 Hagar Road, 1,300,000
SHELTER ISLAND HEIGHTS Patricia, John & Fannie Quigley to Justin & Ingrid Bateman, 38 Tuthill Drive, 2,100,000
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WESTHAMPTON Ralph & Susan Schenk to John A Garibaldi, 9 Bishop Avenue, 1,175,000
S a l e s O f N o t Q u i t e A M i l l i o n D u r i n g T h i s P e r i o d 11111 AMAGANSETT
Marion C Milcetic to Tina Thormalen, 41 Butternut Drive, 525,000
Michael Green Trust to Low Fliers LLC, 1 Cranberry Hole Road, 500,000
SHELTER ISLAND
BAITING HOLLOW
Jessica Goldsmith to Vincent & Ann DiRico, 10 Heritage Drive, 925,000
BHG Development Corp to Michael Gabriel, 95 West Alfred Avenue, 502,000
SOUTHAMPTON
EAST HAMPTON
George P Kazdin to John & Jessica Lupovici, 2 Peconic Road, 760,000
New Sunshine Realty Ltd to John & Greer Hendricks, 4 Anvil Court, 925,000
Vincent & Monica Manfredini to Patrick McCabe, 8 Carriage Ln., 725,000
James & Jenna Minardi to Dmitry G Kobzev, 24 Walton Street, 865,000
EAST MARION Keith Koppelman to County of Suffolk, Bay Avenue, 766,260
FISHERS ISLAND Michael & Terry Crupi to Andrew & Jane Ahrens, 386 Winthrop Drive, 615,000
HAMPTON BAYS
SOUTHOLD Daniel & Susan West to Paul & Kathleen Geiger, 665 Goose Creek Lane, 575,000
WESTHAMPTON Bruce & Claudia Niebanck to Herve Bouillonec, 13 Bayview Drive, 605,000
Accurate, up-to-date, affordable, on-line information about all real estate transactions in your community. Our weekly reports contain: > All Residential and Commercial closed sales in your area > A weekly list of mortgage Lis Pendens filings > The most up-to-date information available The most comprehensive reporting methods available, delivered right to your inbox every week.
Timber Ridge at Westhampton Beach LLC to Raymond & Carole O'Shaughnessy, 53 Samantha Circle, 590,000
Lawrence & Angela Kurtz to Richard Mattone, 15 Realnautic Court,, 825,000
WESTHAMPTON BEACH
MONTAUK
Donald & Penny Bolum to Pauline Arama-Olsten, 52 Harbor Road, 860,000
Estate of Stanley Rzasa to Leo J Egan, 14 Farragut Road 875,000 Irven H Rinard to Tom & Nancy Brown, Kettle Hole Road, 670,000
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1143168
Martin Anidjar to David James Miller, 118 Two Holes Water Road, 2,200,000
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