What’s still hot on frozen Shelter Island? Real estate.
As in sizzling, with several buyers doing cash deals for properties over $1 million. “I’ve done several large cash deals,” said attorney Mary-Faith Westervelt of the law firm Westervelt & Rea. Seeing a happy uptick in real estate transaction work by her firm and others over the last couple of months, Ms. Westervelt said it seems many people in the market now are hoping to be in second homes by summer.
“Just a couple of days ago there was a $1.5 million cash deal, and there are a few others going on I’m aware of,” she added. Other real estate pros have noted that the market is on the rise all over the East End, including Shelter Island.
The rising trend can be spotted by a significant increase in vacant lot sales, with investors with means eyeballing vacant land as something to build on. Those in the business are saying that an active early rental market now in progress means some potential buyers are looking at a Shelter Island summer stay as a test drive before putting down money for a permanent second home.
Ms. Westervelt said Shelter Island is unique when it comes to timing real estate deals. “Up-island, where people have one piece of real estate — their homes — they generally look for houses in the spring so they can move in the summer to get their kids settled and ready for school in September,” she said. But on the Island that’s less important since a lot of real estate inventory is second homes. “We tend to see those looking for second homes in the fall,” Ms. Westervelt said. “They’ve been renting for years and decided to buy or came here visiting or on vacation and said, ‘Wow!’ They’re looking in late summer and early fall to buy. We do a lot of contracts in September and October and closings at the end of the year.”
But who has the kind of money these days to drop on multi-million dollar properties? If you’ve heard the news blaring from lower Manhattan, you have a clue.
Wall Street and the overall financial industry had record years. The Dow Jones Industrial Average and the S&P 500 soared through previous records and the NASDAQ posted its highest numbers in over 13 years. According to a report from New York-based compensation consultants, Johnson Associates, financial advisers, asset managers and underwriting investment bankers will see bonuses 15 percent higher than last year.
Published reports have stated that the end of the 2013 Wall Street rally had a number of Wall Street firms setting aside millions of dollars for bonuses. Plus, there’s generally more wealth in private hands than ever before.
Michael Driscoll, professor and senior executive-in-residence at Adelphi University’s School of Business, confirmed Ms. Westervelt’s observation of cash-on-the table buying. With high-end properties on Shelter Island and elsewhere available in the region, “No one is going in there with 10 percent down and taking a mortgage on the rest. They’re going cash,” said Mr. Driscoll, a 28-year veteran of Wall Street.
He sees the rising trend of real estate transactions here stemming from what he called “Economics 101. Supply and demand. A scarcity of goods. There’s a finite amount of real estate, especially the high-end type, like a house on the ocean in Southampton or a house in Shelter Island on the water.”
It’s not just Wall Street money that’s growing, but across the board the rich are getting richer. The International Monetary Fund (IMF) reported there are more billionaires in the world than before the global recession of 2008, with the number of millionaires growing by more than 55 percent in a decade.
And the nouveau-riche are following a path blazed by old money. In a report titled “Managing Real Estate Booms and Busts,” the IMF stated: “Real estate is an important, if not the most important, storage of wealth in the economy.”