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In the Hamptons, Bargain Chic

There was a time, not long ago, when some Hamptons residents were flipping homes here for obscene returns.

Christopher Burch, a venture capitalist and entrepreneur, started buying oceanfront properties in Southampton in 1997. He renovated and resold them, usually doubling his money every two years, he said. In the decade between 1997 and 2007, “all the properties I bought on the ocean went up between five and seven times in value after a little bit of work,” he said.

Mr. Burch, 59, was luckier than most. Marketwide, prices about doubled in the Hamptons in that decade, and most sellers tripled or quadrupled their investment after renovating, said Jonathan J. Miller, president of Miller Samuel, a real estate appraisal firm.

When I caught up with Mr. Burch the other day at a book-signing at his Southampton home for the author Gigi Levangie Grazer, he spoke about high-end Hamptons real estate as if there had been a death in the family.

“I just don’t think it has come back at all,” he said.

In fact, the volume of sales of prime Hamptons properties is down more than 20 percent from when the market peaked in mid-2007, brokers said. The Hamptons have become a solid buyer’s market, where listings at all price ranges are plentiful and huge price reductions are common.

“If homes aren’t priced correctly, they probably won’t even be shown,” said Harald Grant, a broker at Sotheby’s International Realty.

While the luxury Hamptons market — with sales over $20 million — is recovering at a faster pace than the rest of the market, there is little wow factor in what’s been happening lately.

The Hamptons provide a stunning contrast to what’s going on some 90 miles away in Manhattan, where high-end sales continue to break records and the potential for a $100 million sale no longer boggles the imagination.

The priciest oceanfront sale in the Hamptons this year, closing in February, was a two-acre property in Southampton that went for $28.5 million. Mr. Grant represented the seller of the Meadow Lane home; the buyer was a South American.

That’s a far cry from the spectacular sales in the boom years, like the $103 million that the billionaire Ron Baron paid in 2007 for 40 acres of undeveloped waterfront property in East Hampton. Mr. Grant still remembers one woman that year who turned down an unsolicited offer of $70 million for her Southampton home.

“The trophy sales aren’t really happening any longer,” Mr. Grant said. “In our market for oceanfront, $28.5 million was an average price.”

The high-end Hamptons market has moved in fits and starts. Last year there were two sales over $30 million — one for $32.5 million in Southampton and another for $36 million in North Haven. And this year there have been six sales of $20 million or more, all closing before May.

The lost market that Mr. Burch laments may have been built on loose credit and associated Wall Street profits, as Mr. Miller impressed on me. But perception is often reality.

Conversation around the Hamptons punch bowl used to touch frequently on the rising prices of people’s estates, but it rarely does anymore, Mr. Burch said.

“People were excited about making good investments and that their property values were going up,” he said. “Today, real estate is just not as much of a conversation piece as it was in the past. People talk about their families, their kids’ schools, about preserving the environment..”

That was certainly the case at the event to celebrate Ms. Grazer’s latest beach read, “The After Wife” (Ballantine), about how a Los Angeles woman copes with the death of her husband.

The low-key event drew a smattering of celebrities, socialites and the powerful. The mogul Russell Simmons made the rounds, as did Rita Schrager, the ex-wife of the hotelier Ian Schrager, and Michael Michele, an actress who appeared in the movie “Ali.” There was talk of the presidential election — Mr. Simmons said he had just returned from a “strategy session” with President Obama — and plenty of chatter about the fifth book from the leggy and hilarious Ms. Grazer, the ex-wife of the Hollywood producer Brian Grazer.

The next day I took a drive down Meadow Lane, one of the most coveted streets in Southampton. Calvin Klein is building a huge, glassy contemporary home on a 10-acre lot there that brokers say is destined to become a major trophy property. At the other end of the street, near the heliport, the designer Tory Burch, Mr. Burch’s ex-wife, recently made $11 million on the sale of a house that she had bought for $22.5 million in 2009. While it was considered a teardown because of extensive damage caused by a flood, brokers still cite it as an example of the extreme price reductions that sellers are swallowing.

Other examples abound. Paul Brennan, a broker at Prudential Douglas Elliman, is selling a four-acre spread on the ocean along Montauk Highway for $19.5 million. Three years ago it was listed for $35 million, he said.

Oddly, the price cuts have become a sort of badge of honor in Hamptons society, said Susan Breitenbach, a broker at Corcoran.

“Five years ago people would think something was wrong with a ‘reduced’ property,” she said. Now “people don’t want to look at it unless it is reduced.”

In today’s Hamptons being a bargain-hunter is more chic than ever. And nobody wants to overpay.

“The worst thing that could happen is you are at a cocktail party and somebody could say, ‘Oh, you paid that for that?’ ” Ms. Breitenbach said. “They are more concerned about that than anything else.”

The Wall Street types who helped propel the Hamptons market to new heights are still around, but these days they are less eager, Mr. Brennan said. “I have had any number of Wall Street guys and real estate guys saying, ‘Show me the deals, show me somebody who needs to sell,’ ” he said.

Many people are trying. As of Wednesday, there were 62 active listings over $20 million, 133 between $10 million and $20 million, and 302 from $5 million to $10 million, according to Miller Samuel.

“I think the market is flooded in the middle,” Ms. Breitenbach said. “If a customer is looking for something between $5 million and $10 million you could send them 60 to 100 listings.”

Before the crash, the mix of buyers in the Hamptons included the Wall Streeters, as well as foreigners and Americans from around the country. These days there are fewer foreigners buying, even as they continue to push condo prices higher in Manhattan, brokers said. Mr. Grant says 90 percent of his buyers are New York-based and most work on Wall Street. “We are not getting that distant buyer any longer,” he said.

Ms. Breitenbach, for her part, said she had “a bunch” of prospective buyers from the West Coast, as well as Russians, Germans, even one wealthy South American. “This week I was out with people from France,” she said. “They are looking, but I haven’t signed a contract on anything yet.”

While a tad wistful, Mr. Burch isn’t losing much sleep over the dip in the Hamptons’ fortunes — nor his sense of fun. The day after the book-signing I attended a party he gave for 400 guests. The highlight was a performance by Mini Kiss, a five-man tribute band of “little people” who performed four songs from the ’70s heavy metal band.

The set didn’t go over as well with most guests as the Mexican food and pig roast (which I missed, because I didn’t get the memo that it was a dinner party). Mr. Burch said the band at least “made us think back to the great old days of Kiss.”

Later, he wondered when, or if, the high-end housing market in the Hamptons would inspire the same sort of nostalgia. “Maybe Southampton will just trail the New York City market,” he said.

As Mr. Grant said hopefully: “People that are buying $60 million to $70 million apartments in Manhattan will eventually come to buy here. It’s just a question of when.”

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