In August 2020, a buyer closed on a Tudor Revival on Lewis Street for $1.65 million, south of the highway in Southampton Village. By the summer of 2022 the same house was listed for $6.9 million and marketed as a newly remodeled charmer available to rent by the week. What the listing did not mention was that the remodel, a standing seam metal roof, black window trim, and a second story balcony, had never been approved. The Village's Board of Architectural Review and Historic Preservation had specifically denied all three elements. The owner built them anyway.
Six years, one Supreme Court ruling, and one Appellate Division decision later, the house still has no certificate of occupancy. In late May 2026 the Appellate Division dismissed the owner's appeal, upholding the board's original 2022 denial and leaving the unapproved work exactly as unauthorized as it was the day it went in. ARB chairman Mark McIntire said the ruling affirmed the village's right to protect its architectural resources. The house was still being rented out for the season as recently as 2025, but its paperwork problem has outlasted three summers and two courts.
That is the part of the "south of the highway" premium that rarely makes it into a listing sheet.
Ask anyone who works this market why a house on the ocean side of Montauk Highway costs more than a nearly identical one a few blocks north, and you will get some version of the same answer: proximity to the water, older and more established addresses, larger lots, a century of accumulated prestige. All of that is true, and none of it explains why a buyer would pay extra for a house they are then more restricted in changing.
South of the highway in Southampton Village is not just geography. It is also where a lot of the village's oldest, most character-defining housing stock sits, which is exactly the housing stock that draws the closest look from the Board of Architectural Review and Historic Preservation once an owner wants to change anything visible from the street. The board's authority does not stop at the highway line. It reaches any one or two family home in the village referred for exterior work, and it is actively being extended to cover more streets than it does today. Buyers who treat "south of the highway" purely as a location line are pricing half the product.
The ARB's job, under village code, is to prevent alterations that clash with the character of the surrounding district, and its rulings carry real weight. Every application for a building permit involving exterior work on a one or two family home in a reviewed area gets referred to the board before a permit is issued. Interior alterations, pools, and tennis courts are exempt. Roofs, trim, additions, and anything visible from the street are not.
The Falcao case is the clearest illustration of what happens when a homeowner treats that review as optional. The board had already approved a revised plan in exchange for the owner giving up the metal roof, the black trim, and the balcony. He installed all three anyway, then filed a second application asking the board to approve what he had already built. The board said no again. Two courts since have agreed that the board acted within its rights. The property remains listed as non-compliant, without a certificate of occupancy, six years after the first application.
For a buyer, the lesson is not that historic districts are bad. It is that the review process is not a formality to route around after the fact. A house that needs work before it functions the way a buyer wants it to should have that work approved before closing, not assumed as a formality afterward.
The historic district is not static. Since 2022, the village has been working through a survey to expand it, and the proposed boundaries reach well beyond the streets that already carry that designation.
A firm called Preservation Studios conducted the original reconnaissance survey and flagged four areas as under threat of development and in need of protection:
The village hired Preservation Studios to conduct a more intensive, National Register level study of two of those four zones, prioritizing the Southern and Northwest expansions first due to budget. That is the same Lewis Street where the Falcao dispute played out. The street already sits inside the proposed Southern Expansion boundary, which means a house there could soon carry the same design review obligations as a property already inside the existing historic district, whether or not the current owner ever anticipated it.
The village released the underlying survey report in full only in February 2026, after the state Committee on Open Government found that the board had improperly withheld it under a records request filed the previous November. For anyone shopping streets near the current district line, that report, now public, is the single best way to see whether a specific block is under consideration before making an offer.
None of this means the prestige address is overpriced. It means the premium is paying for two different things that get bundled into one price. One is location: proximity to the ocean, the scale of the lot, the pedigree of the street. The other is protection: a design review process that keeps the block looking the way it has for a hundred years, whether the current buyer wants that protection or not.
For a buyer who wants to preserve a historic shingle style home exactly as it stands, that second half of the premium is worth every dollar. It guarantees the neighbor cannot put up something incongruous next door. For a buyer who is counting on a major exterior renovation, a rooftop addition, a modernized facade, the same board that protects the block's character is the board that can say no to the plan, and mean it.
The scarcity that comes with restricted supply has not cooled demand. Across the East End's second quarter of 2026, transaction volume actually fell, down 21.1 percent from the same period the year before, while the median sale price rose 32 percent, according to a residential market report from Brown Harris Stevens. Fewer trades, higher prices, a pattern consistent with a market where the most desirable inventory simply is not turning over.
Southampton Village sits inside what that same report classifies as the area east of the Shinnecock Canal, alongside East Hampton and Montauk, and one real estate professional quoted in a 27East look back at the quarter described Bridgehampton, East Hampton Village, and Southampton Village as the three addresses that consistently post the region's highest median sale prices. A nine bedroom estate on Halsey Neck Lane, itself south of the highway, sold for $12.4 million in September 2025, the kind of trade that reinforces why buyers keep bidding on that side of the line even as review boards tighten their grip on what can be done with the houses once they own them.
If a listing sits south of the highway or on a street named in the proposed expansion zones, a few questions are worth asking before you get attached to the floor plan:
Is the property already inside the existing historic district, or inside one of the four proposed expansion areas identified by Preservation Studios? Has any exterior work on the house been reviewed and approved by the ARB, and does the certificate of occupancy match what is actually built? If a renovation is part of the plan, has anyone floated it past the board informally before the deal closes?
None of these questions show up in a listing description. All of them show up in a closing that goes smoothly instead of one that stalls out with a house stuck between what was built and what was ever approved.
If you are weighing a purchase south of the highway, or trying to understand what a specific street's history means for what you can change, The Burns Team at Compass can walk the district lines with you before you write an offer. Get Your Home Valuation and we will tell you exactly where a property stands.
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