On the North Fork, sky-high prices and few listings

North Fork homes sold for nearly twice as much last year as they did a decade ago, and local real estate agents say an extremely limited number of houses for sale has driven prices even higher this year in the region known for its vacation homes and wineries.

The median price among all sales on the North Fork last year was $800,000 compared with $430,000 in 2012, according to data from the real estate brokerage Douglas Elliman and appraisal firm Miller Samuel.

That 86% increase was the largest by far for any region on Long Island. The median home price in Nassau rose by 60% during the 10-year span and by 62% in Suffolk, excluding the East End. In the Hamptons, the median price rose by 61.7% to $1.35 million. 

The trends that have propelled real estate values across Long Island during the pandemic — buyers’ interest in more living space and record-low inventory — are amplified on the North Fork. In the Town of Southold, which runs from Laurel to Orient, there were only 74 houses for sale as of April 13, according to Kristy Naddell, an associate broker at Douglas Elliman. She said she would expect 175 to 200 houses for sale in a more balanced market between buyers and sellers.   

Prices trended even higher late last year. Looking at just the fourth quarter of 2021, the median price on the North Fork was $900,000 among 161 transactions, 12.5% higher than in the same period the previous year.

Kristen Rishe, a real estate broker and owner of North Fork Real Estate in Southold, said buyers looking for homes between $600,000 and $700,000 are likely to be disappointed with how far their money will go and will be competing with bidders willing to pay in cash without any of the contingencies that come with financing a purchase through a mortgage.

“It’s a weird perspective for me being born and raised out here. Some of these areas were very depressed and you couldn’t give the real estate away,” said Rishe, who grew up in Orient and now lives in Greenport. “Now it’s prime real estate selling for millions of dollars.

“You’re not getting a lot for your money at about $1 million these days [in Greenport], and $600,000 to $700,000 doesn’t get a whole lot anymore,” she said.

“We’ve been saying for 10 years that the North Fork has been discovered and every year we’re like, 'OK, now we’re even more discovered.’ "

But Rishe said the market has taken a step back from intense competition among buyers during earlier stages of the pandemic.

“The feeding frenzy, in my opinion, is over,” she said. “We have investors looking for the fixer uppers, but they’re not flying out the door. The products that are selling are new construction and pristine renovations. Those are the ones that are still having the bidding wars and multiple offers.”  

A dream home

Lauren Hughes, 38, recently bought one of those new construction homes, a five-bedroom, 3,400-square-foot house that is part of the Estates at Royalton, an 11-home subdivision in Mattituck. The house, which she closed on in January for $1.67 million, has GE Monogram appliances in the kitchen and a heated, saltwater pool in the backyard.

Hughes, an executive at a global advertising tech firm in Manhattan, had lived on the Upper West Side of Manhattan for 15 years while spending weekends at a condo she bought in Southold in 2017. But when the pandemic hit in March 2020 while Hughes was pregnant, she began living in Southold full time and her parents soon joined her ahead of the birth of her daughter Libby in October 2020.

A few months later, she was spending the winter at her parents’ home in Vero Beach, Florida, when she came across a fortuitous post on Instagram from Naddell, who is marketing the Estates at Royalton.

“I was feeling really unsettled and uncertain,” Hughes recalled. “I loved the North Fork and I knew I didn’t want to give up my house out there. I just wasn’t sure if I really wanted to live there full time. I actually saw Kristy’s first posting about the Royalton estates, and it was like an a-ha moment for me. I was like, ‘This is it. This is the house I’ve always wanted.' ”

The house is large enough to accommodate Hughes and her daughter as well as her parents, with  two primary suites on different levels and two family rooms.

Hughes’s speed in contacting Naddell last winter helped her lock in pre-construction pricing, with only the floor plans to go on. “I didn’t see the property. I didn’t see the land. I did it all over FaceTime with Kristy from my dining room table in Florida,” she said.

Hughes said she feels fortunate to have locked in her pricing early.

“I could tell where the market was going. There was no inventory. Prices were climbing up. People were starting to compare us to the next Hamptons,” Hughes said. “I just had a feeling. This was a big, beautiful house, Hamptons style. These kinds of homes and developments don’t exist on the North Fork today. I knew it would be in high demand.”

In turn, Hughes had plenty of interest in her three-bedroom waterfront condo on Peconic Bay in Southold. She had purchased the unit in 2017 for $830,000, and when she listed it last year she quickly had five offers and sold it for about $1.12 million, which was $175,000 higher than the list price.

Naddell said she has buyers for seven of the 11 homes in the Royalton development, and prices have kept rising as MarrCon Development Corp. has completed more houses. “I could literally sell hers for over $2 million, and that’s only been a couple of months,” she said of appreciation in Hughes’s home value.

Higher mortgage rates in 2022 have limited the amount some buyers are able to spend, but Naddell said in the short term that’s led to “a frenzy for some of these buyers to lock in before it goes even higher.”

The North Fork’s appeal

The North Fork has an appeal distinct from the Hamptons for buyers looking for a second home, said Judi Desiderio, a real estate broker and founder of Town & Country Real Estate, which has more than 30 offices on the East End.

“It actually took longer to be discovered than I thought it would because it was always this bucolic beautiful, different way of life. More like New England and upstate than the Hamptons,” Desiderio said.

The more relaxed atmosphere than the Hamptons has attracted buyers, especially from Brooklyn, said Bridget Elkin, a real estate agent with Compass in Southold.

“I think it’s one of the closest places to New York City where you feel like you’re actually away,” Elkin said. “In the Hamptons, I think some people feel there’s a mass migration and then you’re kind of there with the same people. The North Fork you have a little more of a rural feel.”

The area’s growing popularity combined with the dearth of inventory has created a frustrating environment for buyers. Thomas McCloskey, a real agent with Douglas Elliman in Cutchogue, remembers moving out to the North Fork in 2010 after the financial crisis and searching among more than 120 homes for sale in the hamlet of Southold. Earlier this month, there were 13 on the market in that area.

“The North Fork is much more popular than it was 10 or 12 years ago as a destination,” McCloskey said. “The vineyards, the breweries and restaurants are a lot more crowded than they were back then ...  The agritourism aspect of our area has increased tremendously, which has brought awareness of what the area has to offer."

Kim West, a real estate agent at Corcoran in Cutchogue who grew up on the North Fork, said she remembers how it used to change after Labor Day, with stores and restaurants closing earlier or completely in the winter. Since the pandemic, that hasn’t been the case, she said.

“It changed the dynamic,” West said. “Growing up here there was always a break in the seasons and the last few years it’s just been year round.”

West recently helped David Burns sell his mother’s house in Greenport. Burns, 51, of North Reading, Massachusetts, sought to sell as his mother, Althea Burns, 78, moved into an assisted-living facility closer to his home.

Althea Burns had purchased the two-bedroom house, which is walking distance from the village’s restaurants, for $580,000 in 2017. The house was listed in January for $699,000 and quickly had about 10 offers to choose from with five real contenders, David Burns said. Many of the bidders agreed to waive inspection contingencies that would allow them to negotiate repairs or a lower price, and the sale closed in March at $776,000.

“It’s incredible,” Burns said. “You think, ‘Maybe we’ll get two offers.’ This isn’t some mansion in Town and Country magazine. It’s a modest bungalow, and it’s so competitive.”

Lack of affordability

While homeowners have been able to cash in, affordable housing options are limited for people with moderate or low incomes. Just 12 of the 152 sales on the North Fork in the first quarter of this year were for less than $500,000, according to data from Town and Country Real Estate. None sold below that level in East Marion, Greenport or Orient in the first three months of the year.

“I think the working class is not buying in the North Fork anymore,” said Michael Hejmej, a real estate agent with RE/MAX Sparrow Realty in Center Moriches. “They’re working there, but they’re not living there. It’s just not affordable, and it’s going to continue that way.”

A state law passed last year would increase the real estate transfer tax on certain properties to 2.5%, from 2%, to finance community housing funds on the North Fork and South Fork. The law, sponsored by state Sen. Anthony Palumbo (R-New Suffolk) and Assemblyman Fred Thiele Jr. (I-Sag Harbor) will fund affordable housing initiatives if voters approve the changes in a referendum. The previous 2% tax was focused on preservation and water quality programs.

Hejmej, who works with both buyers and sellers, said the hot market has lifted prices in neighboring towns as well, and the lack of houses on the market has been brutal for buyers. Of 10 buyers he’s tried to help find homes in the past eight months, only two were able to reach deals. Hejmej, 30, said he often works with buyers around his age, and record-low interest rates in the past few years had helped them maintain buying power as prices rose. Now, with interest rates approaching 5%, those buyers have less power to make winning offers.

“My buyers are not able to afford it anymore," he said.

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.