Hamptons condos available through housing lottery for $536,000

Long Islanders can apply through Oct. 20 for a chance to purchase one of four town houses in a new luxury Water Mill development for a fraction of what they would sell for on the open market.

The selected applicants, who must meet income requirements, will be eligible to buy a three-bedroom, 2½-bathroom condo for $535,875. Other units in the development have sold for $2 million or more.

The condos are part of Watermill Crossing, a 38-unit luxury town house complex in the Town of Southampton, where residents will have access to a clubhouse, a pool and a fitness center. The town required the developer, JS Squared, set aside four condos, or about 10% of the development, to comply with the Long Island Workforce Housing Act.

The homes offer a new housing option for workers on the East End, said Kara Bak, director of housing and community services for the Town of Southampton. The area's housing shortage has contributed to traffic from commuting workers and a difficulty recruiting volunteer firefighters.

“We desperately need affordable housing out here for the workforce,” Bak said. “We don’t get that many units that come up on the east side of the Shinnecock Canal.”

Households with yearly incomes from 80% to 130% of area median income are eligible for the lottery. For an individual, that translates to a range of $92,350 to $150,050. A family of four would qualify with a household income between $131,900 and $214,350.

“It’s a big reduction in pricing and a great opportunity for people who are in that income range,” said James Britz, chief operating officer at the Long Island Housing Partnership, which is administering the lottery for the developer and the Town of Southampton.

The home must be used as a primary residence and applicants must not have owned a home during the three-year period prior to applying to maintain eligibility. Households with liquid assets of 25% or more of the purchase price also are ineligible, according to the program guidelines.

The purchase comes with a caveat: Buyers of the condos won’t enjoy the same home equity gains as other owners. The future sale price of the home will be capped at the purchase price plus the rate of increase of the Consumer Price Index, a common measure of inflation, during the time the person owned the home.

“We want to keep it affordable for the next buyer,” said Peter Elkowitz, CEO of the Long Island Housing Partnership.

That creates a potential trade-off for buyers. They won’t accumulate wealth from homeownership in the same way as other buyers, but they will be able to live in a home worth far more than its purchase price based on other sales in the development.

The new homeowners also will be responsible for nearly $1,100 a month in condo association fees that cover lawn maintenance, snow and garbage removal as well as maintenance of common areas.

The plan for the town houses dates to at least 2017, when the developer submitted a request to the Southampton Town Planning Board to build the 38-unit complex on 6.45 acres, according to town documents.

Applicants will secure their own mortgages, must have at least a down payment of 3% of the purchase price and must complete homeownership counseling through the Long Island Housing Partnership.

A rare Hamptons bargain

Buyers will get a rare chance at a bargain in one of the country’s most expensive ZIP codes. The median condo price on the South Fork rose 12% to nearly $1.3 million during the second quarter, according to data from real estate brokerage Corcoran. That data covers 35 condo sales, including 10 in the Watermill Crossing development, Corcoran said.

Single-family homes sell for even more in the area. The median purchase in Water Mill sold for $6 million during the April-to-June period based on 13 home sales, according to Corcoran. The median price for all homes east of the Shinnecock Canal was $2.4 million in the second quarter.

That compares with a $1.9 million median price across all homes in the Hamptons and $735,000 on Long Island, excluding the East End.

A larger town house, elsewhere in the development, at 3,400 square feet with four bedrooms and four bathrooms, is listed for just under $3 million, according to a property listing with the brokerage Saunders & Associates.

“It’s a tremendous opportunity for people in the east end of the Town of Southampton,” Bak said. “You just can’t find a home in that price range in that area."

Interested applicants can find more information from Long Island Housing Partnership at lihp.org/developments.html or by calling 631-435-4710.

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.