Montauk Madness

First-half sales numbers soar in contrast to the region's more-modest gains
The Ditch Plain Life-Saving Station at Ditch Plain Beach, moved farther inland to a five-acre parcel, recently sold for $3.25 million.

    We may be suffering from Montauk fatigue, what with the hamlet featuring prominently in the news from club goings-on to parking mayhem, but it behooves us to note that real estate there is undergoing as much a resurgence as the hamlet’s motels and eating establishments. And when the fishing capital is called the new Saint-Tropez by Vogue Paris in the June-July issue, you know something is afoot.

     “We’re busier than we ever were,” said Nancy Keeshan of Keeshan Real Estate. Statistics bear her out. In the first quarter of 2013, according to the quarterly reports posted on Town and Country’s Web site, the number of properties sold in Montauk went up 41 percent over that period in 2012, while total Hamptons sales (248) were down 4 percent. Twenty-four houses were sold, as opposed to seven in East Hampton Village, a 30-percent dip from the prior year. A glance at volume tells the same story: Montauk’s sales volume was up 52.13 percent while East Hampton Village’s went down 71.5 percent.

    Both number of houses sold and dollar volume have kept pace, with house numbers rising by 35 percent in the second quarter and volume by more than 10 percent. Comparatively, the number of house sales on the entire South Fork was up only 8 percent.

    “Everything that was sitting on the market for more than a year started to go in the new year,” said Ms. Keeshan. “There’s a younger pulse in the air . . . a lot of cash buyers. . . . They’re feeling a security in the market from over a year ago when they didn’t have the confidence.”

    Certainly one agent who has benefited from the resurgence is Theresa Eurell of Town and Country’s Montauk office. The hamlet is abuzz with the news that last week she closed on a 600-square-foot, two-bedroom, one-bath house on the ocean for $8.5 million. Though the house is teensy, it most likely will not be bulldozed. Perched on the edge of a shallow bluff, once it’s gone its footprint goes with it — and nothing will be allowed to be built on that idyllic location again. Not to worry, the owner has plenty of room on the 1.6-acre parcel to build a dream house, leaving the bungalow that housed the Abbey family during summers since the early ’40s to be made into an architect’s delight. No doubt the beams, salvaged from the Dominy (an illustrious family of craftsmen including clockmakers) barn in East Hampton, will be kept intact.

    That’s not the agent’s only coup of summer. In May, she took a rental client to a house that had been for sale for less than 24 hours — and he bought it without setting foot inside. Originally the Ditch Plain Life-Saving Station at Ditch Plain Beach, the structure was moved farther inland to a five-acre parcel and “lovingly restored” by Hilde Smith. The buyer paid the full asking price of $3.25 million.

    Chris Chapin, a broker in the East Hampton office of Douglas Elliman who hails from Sag Harbor, has a canny outsider’s view of the value of Montauk real estate. Looking at it from a geographical point of view, he points out that “all resort towns on the East Coast from Hampton Bays to Florida are built on barrier islands” and not accessible “to open ocean.”

    “Montauk is the only headlands . . . where you can drive along and see ocean. The whole thing about it is elevation and proximity to ocean. . . . [Montauk] is unique. All other towns are vulnerable to flooding and hurricanes with a direct hit, so if you’re paying attention to the future, the best oceanfront investment in the State of New York is Montauk.” A few other places compare, he said, such as Block Island, Nantucket, and Martha’s Vineyard, but “they’re hard to get to. . . . Montauk is a within a two-and-a-half-hour drive from the capital of the world.” 

    Mr. Chapin happens to list an oceanfront property, along with Ray Lord III, for $9.1 million on Surfside Avenue. The one-acre land “slopes gently” to the beach, he said, rather than ending at a steep bluff that could prove “fatal.” “Surfside is one of the only entirely residential streets on the ocean in Montauk,” he said, referring to streets such as Old Montauk Highway that have mixed zoning.

    John Keeshan, who founded Keeshan Real Estate, which is now run by his daughter, said that “The people with money recognize that it is an important time to get on board. The high-end properties have the potential to gain the most.”

    The former enclave of fishing shanties, ranch houses, and humble beach cottages, even trailers, has become a magnet for high-end buyers. There were four transfers of properties between $2 million and $5 million in this year’s first quarter compared to none in that quarter in 2012, and five between $2 million and $3.5 million, up 67 percent from the equivalent period last year.  

    Sotheby’s lists a 13-acre equestrian ranch called Startop. Though not on the water, it boasts “360-degree views from Long Island Sound [sic.] across the Montauk moorlands to the Atlantic Ocean.” The agency also lists a three-acre lot on the ocean off Old Montauk Highway for $12.5 million.

    “For that [kind of] buyer, money isn’t the issue,” said Mr. Keeshan. At any rate, their “$13 million has a better chance of becoming $20 million. Their investment is almost more secure than anything else you can buy.”

    The drawback is that oceanfront properties are becoming more rare. “Fifty percent of Montauk is now eminent domain,” said Mr. Keeshan, pointing out that it is “a very good thing, but it limits potential for private ownership. If you want your own acre on the ocean you’re going to have to pay for it.”

    According to him, after oceanfront, hilltops with ocean views are the next most desirable locations, followed by East and West Lake Drives and the area near Culloden Point on the Sound. “If you’re on the north side of Old Montauk Highway, not the ocean side, you’re on a hilltop, you’re looking at $2.5 million for an acre or $1.5 for a half acre. . . . You have 180-degree views and can still walk through Hither Hills to the beach.”

    Mr. Keeshan shares the belief that all agents there seem to have, that “demand in Montauk is now greater than anywhere else in the Hamptons.” 

    Trouble is, inventory is scarce. “We’re scrambling around [trying to find it],” said Ms. Eurell. “This week alone I had three people who wanted to buy that oceanfront” property she just sold. What price range are they looking in? “They don’t have a price.”

    What’s attracting the new “young, entrepreneurial, successful” buyer, according to Mr. Keeshan, is the hamlet’s “raw natural beauty.” These are not the fishermen of yore. This is a new generation with “Land Rovers and surfboards. The Hamptons are very manicured,” he said. “Montauk is still wild.” Perhaps, not for long.