“Hamptons New York” by Mark Jenney, licensed under CC Attribution Share Alike 4.0 International, modified by Guzov, LLC.
New developments are changing the aesthetic of the string of 1980s homes in the Hamptons as developers and homeowners are tearing down beach front property to build brighter, spacious, and more luxurious properties, and then selling for triple the price. Land to build new homes is sparse since the remaining open land is being preserved for agricultural purposes and parks, leaving New Yorkers unable to build their dream home without tearing down another property. Gary DePersia from Corcoran Group explains to the New York Times that “with the towns buying up open space, that diminishes further the available vacant lots, making teardowns even more viable and important for those who want to build a house.”
Houses from even the early 2000’s are yesterday’s news as developers now only see these plots for their rebuild potential. Cody Vichinsky, co-founder of Bespoke Real Estate, adds that these beach front properties are still competitive on the market because people are willing to “pay premiums to have a select piece of dirt” to build their dream homes. This practice however has become quite the profit making scheme. Developer and interior designer, James Michael Howard, tore down a $3.7 million 1980’s Bridgehampton four bedroom and three-bath house on 1.1 acres. Architects Bobby McAlpine and Greg Tankersley helped Howard transform this property into a home with seven-bedrooms and nine-baths, with high ceilings, and completely furnished only to immediately place the new home on the market for $11.95 million. And the high price of these properties does not seem to deter the process of tearing down the old to bring in the new. Properties $15 million plus are being listed and advertised as great redevelopment opportunities. Yet, for those who are eager to develop their dream home this comes as no surprise, as vacant land is mostly protected from any property developments.
It is not just the towns making open plots inaccessible. Hamptons’ homeowners have been taking advantage of the Conservation Easement Incentive Act of 2015, whereby landowners exchange development rights to their land when granting a conservation easement in return for tax benefits. Conservation easements are entered into by the landowner and a land trust, allowing landowners to permanently protect their land even after the property is sold. The landowner is restricted from any activity (which will be stated in the agreement) that conflicts with the protection or conservation of the land. The 2006 tax incentive was made permanent by the legislature in 2015 (with increased tax benefits) so that landowners donating a conservation easement can now deduct fifty percent of their annual income for the year of the donation and fifteen years thereafter. Farmers and ranchers, who qualify under IRC 2032A(e)(5), can deduct 100% of their income for the year of the donation and again for the following fifteen years. This incentive has conserved over two million acres of American land and has made land in the Hamptons particularly more scarce and valuable.
What’s the solution? If you don’t want to spend in the multi-millions, you can always enter a lottery for affordable housing in East Hampton. A twelve-unit condo will begin development in the fall, after ten years of planning. The asking price is from $150,000 to $300,000. As for developers looking to build luxurious mansions, DePersia recommends learning to integrate the houses with their natural environment and keep open spaces free: “[t]he best of these new homes are designed in a way that respects the character of the property, its surroundings and the views seen from it.”