For Jordana Sobey and Dr. Steven Sobey, getting in on the ground floor of real estate in Sag Harbor meant borrowing money from their parents, getting a special doctor’s mortgage and tapping their savings — all just to put 10 percent down on their first house, a cozy Redwood nest they bought for $925,000 in November of 2013.
Ms. Sobey, an attorney, and Dr. Sobey, who practices urology in Southampton, have two children. They said they had looked at other houses in the village, but soon concluded the 1,900-square-foot Cape — which they knew needed a new roof and a few other fixes — was the most reasonable.
“This was basically the only one in Sag Harbor that we could afford,” Ms. Sobey said in an interview. “There was one other house around the same price that we were looking at, but it was on a busier street. It didn’t have the same kind of opportunity. We had seen one other similar house, way more expensive but it was all done, but we couldn’t even come close to affording it.”
When $925,000 was the “ground floor” for a pair of bright, young professionals a little over five years ago, it says something about a particular region’s real estate market.
“A new person getting into this market is not an easy thing,” said Michael Daly, a licensed real estate agent with Douglas Elliman. “There’s a lot of competition for entry-level homes, in part because there are so few of them and because the market has been so focused on the luxury market. Even small homes are being built for the luxury market now. There’s very few traditional, entry-level homes being built.”
The median price in Sag Harbor Village in 2018, according to Brown Harris Stevens Real Estate, was $1,377,000. In 2013, the year the Sobeys bought their house, the median price was actually $965,000.
Town and Country Real Estate released a report late in January showing in the greater Sag Harbor region, including Noyac and North Haven, the 2018 median price was lower, at $1,188,000. In 2013, the company reported the greater Sag Harbor region boasted a median price of $850,000.
Both Brown Harris Stevens and Town and Country reported about a third of the 76 houses sold in the village in 2018 were under $1 million, with another third in the $1 million-to-$1.99 million range, and the rest over $2 million.
According to Jane Holden, a licensed real estate broker with Brown Harris Stevens, it’s important that there are homes in the affordable range for first-time buyers.
“If there [are] no lower-end homes, we will lose the workers who keep a community going,” she said. “Fire departments would have no new recruits. Schools would not be full. The base of our community would be lost.”
Mr. Daly, who has been an outspoken advocate for affordable housing and the construction of more rental units on the East End, said he actually sold four houses on the South Fork last year that were in the $500,000 range. Two were in East Hampton town, one was in Sag Harbor and one was in Southampton Village.
“There are pockets where there are more reasonably-priced homes,” he said, citing Noyac, North Sea, Hampton Bays and Springs as examples. “If you are committed to finding them, over time, you will. But we’ve gotten to the point where we have to focus on everyone and everything — sales, rentals, lower-end entry-level housing. Our job is to serve the community, not run after commissions.”
According to Chris Tice, a licensed real estate broker with Corcoran in Sag Harbor, of the 322 houses in Sag Harbor currently for sale, only 48 of them, or 15 percent, are listed under $1 million, and 18 houses, or 5.5 percent, are under $800,000. Ms. Tice said Sag Harbor prices, along with Bridgehampton, have “grown at a faster pace than most areas.”
“This has fundamentally changed what ‘ground floor’ means, and created a higher financial threshold for people to buy in our market,” she said.
For those looking for houses under $1 million, “there is usually a lot of competition for those properties. … Frequently those houses move quickly and often have bidding wars, since there is such limited inventory,” Ms. Tice said. “Houses under $800,000 tend to have less square footage on smaller lots. Often they are located on busier streets or require a significant renovation.”
Ms. Holden concurred. “Ground floor homes will need work. How much or how little dictates the price of the property,” she said.
Christian Lipp, a local broker with Compass Real Estate, said people are even growing more and more comfortable with the idea of a house that requires heavy lifting.
“We’re finding people who aren’t scared of doing a renovation or an update,” Mr. Lipp said. “They’re willing to step into a property that is immediately livable and usable but they can see themselves in the next year or 18 months doing a renovation. That does open up the availability, especially on the entry level of the marketplace, for a first-time homeowner. … There are opportunities out there if you’re willing to do some work.”
And more and more, he said, people are doing what they can to get out of rentals.
“The acceleration of the local rental market and the availability of cheap money” are helping, Mr. Lipp said. “I think the fact that there is such a total dearth of affordable rental space in and around the village drives people, especially on the entry level, to take a second look at purchasing something. Would you prefer to spend $2,000 or $2,200 on a studio or one-bedroom in the village, or try and make the numbers work on a mortgage?”
As for Ms. Sobey and Dr. Sobey, owning their own home has been “absolutely huge” for their family, Ms. Sobey said. Less than two years after buying, the market shot up so much that they were able to take advantage of an increased appraisal and renovate their house.
“We feel that we are the luckiest people on earth that we own our home,” Ms. Sobey said.
She advised first-time homebuyers to “have more cash on hand than they think they’ll need during that first year.” And she said it’s worth doing everything they can financially to be able to transition from renting to buying.
“For everyone that’s like us who didn’t have as much savings but has a pretty steady income in terms of professional jobs, make that sacrifice,” Ms. Sobey said. “When we first bought this house, we said, ‘Wow if we were in any other market — upstate New York or the middle of the country — we would not be sacrificing anything.’ It’s worth it. In the end, we found this house that wasn’t perfect but over time we were able to make it a lot closer to perfect.”
