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How Much Further?

Maybe I’m jaded, maybe I’ve toured a few too many overpriced homes, but I have to say, $20 million ain’t what it used to be on the south shore of Long Island.

Some background: I spent much of my day yesterday in East Hampton, New York. I was working on a story about what the Wall Street bonus boys will be spending their money on this month. Real Estate is the obvious bet, so we decided to take a look at the 2nd home market on Long Island.

Granted, East Hampton is the top of the top, where the exceedingly elite meet to greet and eat, and granted, I was looking at a house on Further Lane, which was immortalized in James Brady’s novel of the same name, but which really didn’t need to be, given the names already associated with the potholed little lane (Spielberg, Joel, etc.). The house is new construction, list price around $19.5m.

I don’t get it. It isn’t even on the water. Yes, it’s big: ten “bedrooms,” even more bathrooms, swimming pool and tennis court (which everybody and their gardener has in the Hamptons). The house is attractive, spacious, well built; it has a lovely oak den, small sauna, steams in the basement and high-end kitchen and bath fixtures (Perrin & Rowe soaker in the master shower, yum!). But it is not on the water, not on a huge piece of land, not at all secluded, and frankly not equipped with some of the truly high-end amenities I’ve come to expect after a few years of doing the “Million Dollar Homes” series on CNBC.

Now before every Realtor on the East end of Long Island tells me I don’t know what I’m talking about (that’s putting it nicely), let me put things in perspective. Last year I toured a 14 million dollar home on Hilton Head Island in South Carolina. I realize Hilton Head is not the Hamptons, and location is a big big chunk of the price tag, but this house was unreal: new construction as well, just as many rooms, but so much more. The Hilton Head home had water on three sides, tromp l’oeil swimming pool falling into the ocean, kitchen with endless hand-carved Italian finishings and the highest end fixtures and appliances, Turkish stone floors, Alderwood trim, original artist murals in the dining room, full home theater with leather seating for 16 plus full stage behind the movie screen, indoor pool, master bathroom bigger than my house (complete with view of yacht slip from the tub), five-car garage, and a lanai with a Viking barbecue “system” that would make Bobby Flay wet his pants. THIS I would plunk down $20m for in a heartbeat.

So my question is this: how much farther, or further for that matter, can the Hamptons go? Realtors there will tell you that the market is “protected,” and by that they mean that no real estate slump in Scottsdale is going to have even the tiniest impact on East Hampton. Wall Street is in Manhattan and the Hamptons are Manhattan’s beach. ‘Nuff said. Location = price, and record bonuses translate to record real estate prices. If prices for Manhattan’s Upper West Side 4 bedroom + properties can appreciate 48% in 2006 during a so-called housing slump nationwide, then East Hampton will necessarily follow suit. I just wonder: when will the suits start to notice just what exactly they’re getting for the money?

Questions? Comments? RealtyCheck@cnbc.com

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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