Fire Island Heats Up

IF you’re wondering whether the real estate market on Fire Island has finally shaken off its “relatively undervalued” reputation — at least when compared with places like the Hamptons and Litchfield County, where prices have soared over the past decade — consider this:

Fire Island

Kirk J. Condyles for The New York Times

FOR SALE Laura Marvin Smith says new homes bring top dollar.

In Seaview last weekend, a couple from Philadelphia who were out on Fire Island hunting for a summer getaway passed on making an offer for a five-bedroom beachfront house that was listed at $3.3 million. Why? Because they thought it too much to spend for what they considered to be a teardown.

And in nearby Saltaire, what Linda Cahill of Barrier Beach Properties called a “vicious, all-out bidding war” recently broke out over a house on the bay (renovated five years ago, and complete with private dock and separate guest house). Ms. Cahill said it sold for more than the listing price of almost $1.7 million after being on the market for less than a week.

All this on a sliver of land — little more than a 32-mile-long sandbar, really, between Great South Bay and the Atlantic Ocean — where just a few years ago bargain hunters could find fixer-uppers selling for $350,000 and where even a beachfront home with sweeping views of the ocean might have gone for less than $1.5 million.

Interest in Fire Island is swelling in communities all along its coastline, real estate agents and appraisers say, as the old bungalows that were once floated over from the mainland are torn down and replaced by cedar-sided towers with picture windows, spacious decks and swimming pools.

“Some of the old-timers who have had houses for so many years are selling,” said Harvey Levine, who owns the 12-room Seasons Bed and Breakfast in Ocean Beach. “They’re just cashing out.”

Over the last four years, the market has surged in communities from Ocean Beach to Fire Island Pines, with even homes without a water view or swimming pool selling for more than $1 million — and some homes on the ocean asking for three times that figure. One developer recently bought two neighboring lots on Ocean Walk in Ocean Beach and has permits to build two new houses, each with a swimming pool, that will be priced between $1.5 million and $1.8 million, said Laura Marvin Smith, a broker with Fire Island Homes.

Five years ago, the median price for Fire Island houses was a little more than $370,000, but when bidding wars started raging three years ago, prices shot up. When a four-bedroom, two-and-a-half-bath inland home in Ocean Beach sold for $950,000, “mouths dropped when they heard the price,” Ms. Smith said. Now new construction inland in Ocean Beach is selling routinely for more than $1 million. Median prices across the island have risen to $710,000, according to Comps Inc., a Glen Cove firm that tracks real estate transactions.

AND, it seems, the newer the better. Real estate agents like Ms. Smith say that owners of older homes that have been on the market for five or six months have begun to negotiate on price, but that new construction is bringing top dollar.

Moreover, home buyers are demanding once unimaginable amenities. “Satellite TV, DSL, central air-conditioning, these are the must-haves,” said Grace Corradino, the broker for the Seaview house that the Philadelphia couple, David and Debra Magerman, decided to pass on. When she first came out to the island in the 1980s, she said, “We didn’t have a telephone, no TV — it was like high-end camping.”

For decades, Fire Island has been defined by the distinct — and idiosyncratic — identities of its 17 communities, from the swinging singles in their Kismet and Fair Harbor group house shares, to the quiet family getaways of Saltaire and Lonelyville to the predominantly gay and lesbian enclaves of Fire Island Pines and Cherry Grove. But that has changed in recent years, with some of those singles now the parents of teenagers — and still coming out each weekend — and many straight couples finding a welcoming presence in the Pines and Cherry Grove.

The ethnic makeup, too, is more diverse than in the old days. “There are more Indian people, more Asian people; 20 years ago I didn’t see that,” said Karen St. Clair, who was recently looking for a home in Ocean Beach and Seaview that she hoped might be right for her husband and their 7-year-old son, Juwan. Ms. St. Clair, who is African-American, said she and her family, who live most of the year in Laurelton, Queens, had been renting for the past six years in Ocean Beach and now felt ready to buy. “I was leery 20 years ago,” she said. “You’re not just buying a house; you’re buying into a whole community.”

While much has changed on Fire Island, however, two things have not: The island is still almost entirely car-free, and it still remains vulnerable to the forces of nature. One powerful hurricane, and a lot of those multimillion-dollar beachfront homes could well be swept into the ocean, and lost forever (and, possibly, not be allowed to be rebuilt). That vulnerability is one reason many brokers say that the island real estate prices have stayed relatively affordable, compared with those in other second-home communities in the Northeast, but that appears to be changing. “If there’s a storm, the prices will go down,” Ms. Corradino said. But memories are short, she added. “They’ll come right back up.”

New buyers seem to care about size. In Seaview, for instance, combining of lots on the ocean and bay sides has led to the construction of consistently larger homes, including two Hamptons-style cedar-shake houses that have recently risen along the bay. In Saltaire, Mario Posillico, the village manager, said there has been a flurry of building applications in recent years, and four recent approvals to replace older single-story homes with new two-story structures, along with another complete renovation.

Ms. Cahill, the Saltaire real estate agent, said most of the new homes in Saltaire, with its sprinkling of celebrity residents like Geraldine Ferraro and, until her death this summer, Liz Claiborne (her husband still lives in their two-home beachfront compound), are contemporary in style, like a simple three-bedroom, two-bath house with beach access that was recently replaced with a five-bedroom, three-bath house with an office.

“The top has gone up more than the middle,” Ms. Cahill said, defining the middle as being around $700,000. One house now in contract at $1.8 million “would have gone for under a million five years ago,” she said.

Conversely, among the most affordable areas are Ocean Bay Park and Kismet, said Joseph Grossman, an appraiser based in Bohemia on Long Island, who added that overall prices on Fire Island have been rising at a rate of 10 to 15 percent a year, and on the ocean even more than 15 percent.

The more rustic homes at the low end of the market now start at $500,000, he said. “These same properties were selling for $180,000 to $200,000 10 years ago,” he said. An oceanfront house in Kismet — which recently got new concrete walkways that spruced up the look of the town — sold for $1.25 million, he said. Ten years ago, oceanfront homes in Kismet sold for no more than $500,000, he said.

However, even on the high end, buyers say they have been able to find relative bargains. That’s what John Harkrider, 41, and his wife, Anja Kroencke, 38, found out two years ago when they were looking for an oceanfront home to spend summers with their two young daughters. The family lives full time in SoHo in Manhattan, where Mr. Harkrider is an antitrust lawyer and Ms. Kroencke is an illustrator.

Searching online for houses on Long Island, they picked just two must-have criteria: waterfront and “under $2 million.” The only homes that popped up, Mr. Harkrider said, were in Cherry Grove and the Pines. Mr. Harkrider believes that compared with properties in the Hamptons, where houses on the water, even on a canal or bay, can start at about $6 million, waterfront real estate in Cherry Grove and the Pines is undervalued by more than a million dollars.

BUT beyond price, Mr. Harkrider, whose parents were both artists, and his wife, who grew up in Vienna, felt Cherry Grove was more suited to their artistic temperament. “The one thing you notice when you come to Cherry Grove is, not just that it’s almost entirely gay, but it’s still definitely ethnically diverse, much more than East Hampton or any of those other East End towns,” Mr. Harkrider said. “It’s like the East Village, dumped on the ocean.”

They bought a two-bedroom house on the ocean in Cherry Grove for $990,000 in 2005 and are now expanding both up and out into their two-acre lot and adding a pool. They have also found there are lots of children, of both straight and gay couples, in the area.

“It used to be that this area was a big secret,” said Doreen Katen, a real estate broker who owns D. Katen Fire Island Properties, which is based in the Pines. “But now people are open and they have their families out. Gay parents have a wonderful place for the children to play.”

CJ Mingolelli, a Prudential Douglas Elliman real estate broker in Cherry Grove, said values in that community have increased fivefold in the last decade. The least expensive home he is listing is a two-bedroom bungalow, a fixer-upper, at $500,000. An oceanfront house is listed at $1.5 million. In the Pines, where homes tend to be more expensive, a four-bedroom “upside-down cake,” with bedrooms on the first floor and living spaces above, on the ocean is $1.7 million.

Certainly many of the people who gathered at an end-of-summer cocktail party held last Saturday at 26 Bungalow Walk in Ocean Beach seemed to feel that the Fire Island market still offered some pretty good deals. Among them were Ken and Brenda Luckow, who had recently signed a contract to buy the property, a four-bedroom, three-bath house in the center of the island, which had been listed by Ms. Smith, the broker with Fire Island Homes and also the party’s host, at $1.3 million.

“They call it a McMansion,” Dr. Luckow, a veterinarian, said of his new home, which sits snugly between two modest bungalows. “The village is worried about these kinds of homes. They’re having meetings to try and control what gets built. But I didn’t build it; it was already there.”

A McMansion? Tell that to people in the Hamptons, where a four-bedroom residence on a tiny plot of land might be considered a starter-home for some well-heeled buyers.

Or ask Barbara Corcoran, the former real estate executive, who says that she’d be lucky if she could get $1.5 million for her 3,500-square-foot, six-bedroom beachfront home in Saltaire. “That’s a mansion” on Fire Island, she said. “In the Hamptons, a mansion is 35,000 square feet.”