(Photo: Scott Frances/Esto)

The Hamptons and The Catskills
Here’s the bitter pill: When the “correction” comes, the second-home market will see it first. “If you’re on the financial ropes, the place you fight for is the place you live in,” says Paul Cole, a mortgage broker at Trachtman & Bach. (Statistics show that second-home buyers default more often than primary owners.) Ron Guichard, who’s been selling in the Catskills for more than two decades, says that “everything flattened from 1992 to 1997.” The area’s poised to feel some pain, but brokers voice the plaintive hope that it’ll be better this time. At least it’ll do better than the Hamptons, which is poised for a hard fall. The run-up has been dizzying—instant doublings in value, millions made by spec builders. (One developer bought a house for $2.2 million last year, tore it down immediately, and sold its unfinished replacement four months later for $5.9 million.) A negative turn in the city’s fortunes almost immediately translates into problems out here, confirms Lori Barbaria of Prudential Douglas Elliman Bridgehampton. And Hamptonites can’t just lease their places out to survive a bear market. (Who rents a second home year-round for $10,000 a month?) Owners, then, may be forced to sell. All the same, such nastiness may be rare south of the highway in Southampton and East Hampton, where many residents are rich enough to wait it out. Besides, says Barbaria, “there are always people who’ll buy in down markets. They’re like crows sitting on a fence—they wait, they’ve got cash, they swoop in and get a deal.” Unless, in a Glengarry Glen Ross moment, Shelley Levene just sold you eight units of Mountain View. Then you’re really stuck.

Risk Factor: 9.0

With Kate Pickert and Will Doig

Related:

• Archive: “Features”
• Articles by S.Jhoanna Robledo
• Table of Contents: May 23, 2005 issue of New York | Subscribe!