The Price of Paradise
The Real Estate Market on Fire Island
By Nicole Pressly Wolf
and Ashraya Gupta

“Safe upon the solid rock the ugly houses stand:

Come and see my shining palace built upon the sand.”

—Edna St. Vincent Millay

According to Suffolk County sales reports among the west-end communities, the average sale price in 2003 was $422,750. That price rose in 2004 to $498,230 and last year in a leap of almost $150,000 in 2005 to $624,000. It is a fact: prices are high for “shining palaces” and have been climbing the last few years in leaps and bounds.

All across the island, realtors have diverse opinions about today’s market. Of course, no one can know for certain where the market is headed. In the Pines, Jon Wilner of Island Properties said this season’s “the best we’ve ever had,” but in neighboring Cherry Grove, Shirley Mandell of Island Realty maintained, “It’s not great, but it’s not bad. I’m just being honest.” Why such widely differing views? Dana Wallace of Dana Wallace Realty in Ocean Beach said, “It’s hard to evaluate the real estate market in mid-July. By the end of October, if we’re still seeing a slower sales market, then prices will adjust.” It appears each Fire Island community is responding in its own unique way to the conditions of the market, with the sales season just beginning to kick in.

The Pines is “back in a big way,” according to Bob Howard, a realtor in the area for over 30 years. He said this season is “the best in a decade.” Wilner agreed; all of his seasonal rentals were gone by April. Howard offered a few explanations for the recent real estate boom: a new generation is discovering “the beauty, fun, and adventure of the Pines,” while an older generation, once driven away by memories of the AIDS crisis, is returning. The Pines has also recently undergone significant changes. Howard said “After 40 years of neglect by John Whyte,” new “young and excited” owners are changing the face of the Pavilion (the main disco and party area in the Pines). The community also has a newly renovated $2.5 marina, which opened earlier this summer and a new modern community house in construction. The beach looks great, too. Beach replenishment has been an ongoing project in the Pines, thanks to local support. Funds are being raised now for a 2008 program.

Sales and rental prices reflect this upswing. Wilner had seasonal rentals pay up to $101,000 and has seen a $200,000 sales increase per house. Howard said oceanview properties have sold for over $2 million. Both Wilner and Howard agreed that July 4 weekend was one, if not the, biggest one they’ve seen. Both said not a single house was left open.

In Cherry Grove, however, the market appears to be slower. Shirley Mandell said the season started “later than previous years,” not getting into full swing until July. She’s seen a tendency favoring weekly and monthly rentals over seasonals. Daytrippers have also become prevalent this season. Mandell hypothesizes the change may be due to high gas prices.

The high price at the pump was offered by many as a possible explanation for real estate trends. Working in middle island communities, both Carin Roth of Fire Island Real Estate and Jonee Wollensky of Fire Island Sales & Rentals ascribed the increase in vacationers and buyers from the mainland to gas prices. Roth said, “People who used to do Cape Cod and Nantucket are coming here.” During oil shortages of the past, Roth said the same thing happened. But she also suggested that it’s not gas prices alone: recent advertising and exposure on the mainland have revived interest in Fire Island.

The types of people have also changed. Many realtors confirm they’ve seen a lot more families rather than singles and Roth described recent buyers as “more sophisticated.” They both said the rental season was doing well and that the sales season is off to a promising start.

But Bonnie Nolter of Red Wagon Realty didn’t entirely agree. They still have some rental vacancies. She ascribed it to the fact that “owners don’t want to come down from the high prices of a few years ago.” But at the same time, prices are leveling off. A small cottage that usually rented for $20,000 went for $14,000 this summer. The cottage had no air conditioner or dishwasher, and these days, “people expect those things for their money.” The owner had to take the lower price because she was unable to use the house herself or leave it empty.

Further west, prices are still escalating. Ali Beqaj of Beqaj Realty said “prices have gone up dramatically in Saltaire,” the average house is selling for about $900,000. Sam Wood, a builder and realtor in Kismet, has also seen some record sales. But the market itself is sluggish, said Grace Corradino of Fire Island Living. When people still “ask ridiculous amounts,” the houses stay on the market longer and eventually, the prices level off. Kitty King of Kitty King Real Estate doesn’t believe prices will go down. In the past, she’s seen that if a house doesn’t sell, rather than lowering the price, people will simply use the house themselves. But she also said that “anything I get listed sells.” The number of listings, however, is down. Almost all west end realtors agreed that there’s a lack of inventory for sales. For a while this winter, Linda Cahill of Barrier Beach Realty said there was no inventory whatsoever. Typically, houses are put on the market in the fall, so realtors are preparing for the season.

Construction on the island has not slowed. Sam Wood said that since building permits take so long to procure, construction gets perpetuated, even during downturns in the economy. He said “last year, I thought I might need a night crew.” Grace Corradino said overbuilding was taking place, especially in Fair Harbor but “at least now they’re going through the variance process and have to use a set-back.”

Rental Market

Rentals are trending towards shorter periods and are increasingly expensive. Don Goldman, based in Dunewood, said the higher costs are causing a preference for shorter rentals. Corradino said anything waterview is a premium, with oceanfronts going for about $8000 per week. Cahill has seen an increase in owner occupancies, so she said there’s less to rent. And what does get rented has been going to an older crowd. Corradino said “20-somethings just can’t afford it.” Kitty King thinks people who used to rent in the Hamptons are coming here, “Instead of driving their kids to the beach, they can just walk everywhere here. Once you’re on the ferry, you’re on vacation. Its freedom.”

Weather conditions have also become an increasing concern. Corradino has been hearing “the H word,” hurricane, a lot lately. Linda Cahill said “it’s crazy not to be [concerned].” Fire Island’s barrier beach ecosystem is fragile, especially with the rising threat of global warming. But the very factors that place Fire Island at risk, draw people to it. After all, in real estate, it’s always been about location, location, location. With 35 miles of pristine beach, Fire Island certainly has that. But how will the real estate market on the island respond to these environmental concerns, or today’s uncertain economy and ever increasing problems in the Middle East?

“It’s a really exciting time in real estate,” said Linda Cahill. “Something’s going to shift, but it could go either way.”