East End home sales surge in fourth quarter, but rise may be temporary

Images of a seven-bedroom ocean front home in Sagaponack, listed by Town & Country for $11.5 million, that is now in contract

Homes sales on the East End of Long Island saw a stunning leap in the fourth quarter of 2009, according to a market report released today by Prudential Douglas Elliman.

The number of sales on the East End, which includes the Hamptons and North Fork, jumped 55.4 percent in the fourth quarter to 564, from 363 in the same quarter of 2008 and 22.9 percent from 459 in the third quarter, the report determined.

In the Hamptons area of Long Island’s South Fork, sales skyrocketed 59 percent in the fourth quarter to 409 from 257 in the prior-year quarter, and 20.6 percent from 339 in the third quarter. Median sales prices rose 4.9 percent to $917,900 in the fourth quarter from $875,000 in the same period of 2008, and increased 13.3 percent from $810,000 in the third quarter. However, the average price of a Hamptons home — $1.59 million — dipped 12.3 percent from the prior-year-quarter.

The North Fork showed a similar uptick, with sales activity surging 46.2 percent to 155 from 106 in the prior-year quarter. North Fork price trends showed more weakness than the Hamptons, however. The median sales price in the North Fork in the fourth quarter was $450,000, 10 percent less than $500,000 in the same period of 2008.

The fourth quarter saw the highest level of sales on the East End in two years, said appraiser Jonathan Miller, president and CEO of Miller Samuel, who prepared the report.
(For a story about the Hamptons residential market over the last decade, click here.)

Industry observers attributed much of the activity to lower prices.
“Sellers were finally at the point where they conformed to current conditions and reduced their prices,” said Judi Desiderio, the CEO of East End-based Town & Country Real Estate, which released its own Hamptons market report earlier this month. Town & Country’s report found that the number of home sales in the Hamptons increased 47 percent year-over-year in the fourth quarter, while the median price rose nearly 13 percent to $985,000 from 2008.

“People were seeking out more value for their dollar,” Miller said. “That’s evident in the surge in sales activity.”
Both Miller and Desiderio cautioned that the current spike in activity is deceptive because East End sales have been so anemic for the past several years. “The credit crunch nearly froze most housing markets in the New York City area,” Miller said, noting that there were only 201 sales in the first quarter of 2009, the smallest amount his firm has ever tracked. “You’re coming from a very low spot.”

The number of quarterly sales has nearly tripled since then, but it’s still far less activity than during the peak, when some quarters brought around 1,000 East End sales.

“Even with the surge in sales, we’re still at about half the peak level,” he said.

Miller and Desiderio also emphasized that much of the current activity is due to pent-up demand — people who put off buying or selling their homes while the market was in free-fall.

“So many people who were on the fence for two years are coming into the market,” said Desiderio, whose firm recently put in contract a seven-bedroom home on Daniel’s Lane in Sagaponack listed for $11.5 million.

Once the activity from pent-up demand dies down, the market could experience continued weakness.

“The surge in activity has stopped or slowed down the decline in prices,” Miller said. “But we’re still looking at a weak regional economy and very high unemployment levels. People are more confident and they’re not standing on the edge of a financial cliff, but I would not be surprised to see a weaker market going forward until those issues are substantially corrected.”

The East End real estate market tends to behave more like New York City than the rest of Long Island, Miller said, because of the large number of Manhattanites who own homes there, a cohort which grew in the past decade.

Long Island proper saw a similar surge in home sales, Elliman found.

The number of sales on Long Island, excluding the East End, jumped 34.1 percent to 5,935 from 4,427 sales in the prior-year quarter, and increased 5.9 percent from 5,603 units in the third quarter, according to Elliman’s report. But prices in the area continued to fall slightly. The median sales price of a Long Island home dropped 4.2 percent to $361,000 from $377,000 in the same three months of 2008, and 3.7 percent from the third quarter.

Long Island is “continuing to see price declines, although the pace is easing,” Miller said.