East End residential sales activity and prices grew by double digits in the third quarter of 2011, according to a report released today by Prudential Douglas Elliman, although the increase, as is often the case, was skewed by booming luxury sales and a slow market in the same period last year.
Compared to the third quarter of 2010, home sales in the Hamptons and North Fork jumped 14.7 percent, to 538 from 469, and the median price rose 12 percent, to $700,000 from $625,000, the report says. Following seasonal patterns, sales activity in the third quarter dropped 13.1 percent and the median sale price decreased 8.6 percent over the previous quarter.
Though the year-over-year increase is real, the numbers overstate the extent of the improvement because of a bump in high-end purchases from Wall Street and foreign buyers and the continued fallout from the expiration of the federal tax credit for homebuyers, explained appraiser Jonathan Miller, president and CEO of Miller Samuel and the report’s author.
The tax credit applied to contracts signed before April 30, 2010, meaning the closed sales were counted in the second quarter and early third quarter of 2010. Sales then dropped sharply, Miller said.
“It really wreaked havoc on housing markets,” he said of the tax credit, adding that it “has the impact of creating more churn. It created buzz. It created activity by people that didn’t qualify for the credit.”
While the Hamptons is seen as a luxury market for second homes, which were not eligible for the credit, Miller underscored that it is a year-round market where two-thirds of residences sell for under $1 million.
Meanwhile, sales at or above $5 million nearly tripled year-over year, to 30 from 11 — the second highest number since Miller began tracking the data in 2007, and six more than the previous quarter. In the fourth quarter of 2010, 38 properties sold at or above $5 million — an anomaly caused by concern over the potential expiration of the so-called Bush tax cuts, Miller said.
The 54 sales in the luxury market — defined as the priciest 10 percent of sales — represented a 14.9 percent increase over the last year, and the median price jumped 47.3 percent to $5.45 million. In comparison, the median price for the least expensive 20 percent of sales saw a 39.4 percent drop over the third quarter of 2010, to $257,500.
The luxury market’s strength helped fuel a 22.1 percent increase in the Hamptons median sales price over last year, up to $850,000, and a 12.4 percent increase in sales, up to 398. In the North Fork, the median price declined 8 percent year-over-year to $450,000, while the number of sales jumped 21.7 percent, to 140 sales.
Elliman’s numbers echo a third-quarter report released by Hamptons brokerage Town & Country earlier this month, which showed that sales of high-end properties drove gains across the market.
Sales prices increased in nine of the 14 areas surveyed, but Amagansett experienced the greatest year-over-year change in volume of home sales, to 11 in the third quarter of 2011 from six in third-quarter 2010.