Despite increased sales volume, home prices remain stable on the East End: Corcoran

High-end market going strong, appraiser Jonathan Miller says
By Yaffi Spodek | January 26, 2011 06:49PM

From left: Corcoran’s Rick Hoffman and appraiser Jonathan Miller While sales activity in the East End residential market in the fourth quarter of 2010 increased, prices remained flat and inventory lagged, according to the latest report released today by the Corcoran Group.

The number of sales jumped 52 percent, to 2,266 units, while sales volume climbed 53 percent, to $3.1 billion; average prices, however, rose just 1 percent, to $1.349 million, and median prices increased 6 percent to $721,000.

“I think that it reflects a great increase in activity in number of home sales and the dollar value of the homes sold,” said Rick Hoffman, Corcoran’s senior regional vice president of the East End. “Houses that are selling are those that are well-priced and those that people have made reductions on.”

Prudential Douglas Elliman’s fourth-quarter report on the East End, also released today, shows that sales volume and prices “essentially remained stable,” said appraiser Jonathan Miller of Miller Samuel, who prepared the report.

Land sales are showing signs of life.

In the South Fork-Shelter Island area, sales of vacant land on the East End jumped by 92 percent in the fourth quarter of 2010 to 184 units, compared to the last three months of 2009, when there were just 96 sales, according to the Corcoran report. The average sales price increased by 50 percent. The North Fork had a less dramatic increase, with a 24 percent jump in sales activity since fourth-quarter 2009, and an 8 percent increase in average price.

“The good news we have here is that the [amount of sales] in the land market increased, which shows buying and building confidence,” Hoffman noted. “People are buying land on spec to build, which indicates that the market is coming back here.”

But, the Corcoran report also shows an increase in inventory on the East End from fourth-quarter 2009, when there were 7,609 homes on the market, to 8,419 in fourth-quarter 2010.

“Despite large increases in sales volume, inventory has still increased, showing that that even though a lot of properties are selling, a lot more are coming on the market,” Hoffman said. “Sellers need to realize that well-priced properties are moving.”

Hoffman also said that since November and December didn’t see as much activity as is typical for the fourth quarter, “that will translate into a very busy spring market.”

“Lots of buyers are looking and it remains a buyer’s market,” he added. “The key right now is that sellers need to be very realistic in their expectations.”

Meanwhile, the Elliman report indicates that median prices in the East End were up 4.1 percent year-over-year and sales activity slipped 4.6 percent compared to 2009, with the fourth quarter seeing a more normal distribution of sales as compared to a year ago, Miller said.

“A year ago at this time, we had a release of pent-up demand, since there was very limited activity in the first half of 2009 due to the credit crunch,” Miller said. “In 2009, there was a significant shift, and we didn’t really have a spring market… but there was a heavy concentration of sales in the fourth quarter of 2009.”

Year-over-year, the median sales price in the Hamptons fell 2 percent in the fourth quarter to $900,000 from a year earlier, while the number of sales slipped 1.5 percent, to 403. In the North Fork, median sales prices increased 4.4 percent to $470,000, compared to fourth-quarter 2009, while the number of sales declined 12.9 percent to 135.

The luxury market, which is defined as the top 10 percent of all sales, or those at or above $5 million, fared pretty well. There were 38 properties such properties that sold during the fourth quarter, while in the last three months of 2009, there were only 24, the Elliman report shows.

“This was a shift in the mix,” Miller explained. “That small subset illustrates that we saw more high-end activity, which skewed price indicators higher, when actually, prices were flat.”

The last five quarters have been pretty consistent, Miller said, with prices remaining relatively consistent, though there has been movement toward higher-end properties.

As to what can be expected in the next quarter, “there’s been a fairly significant correlation between the market on Wall Street and the Hamptons, and since the sentiment is that Wall Street bonuses are at or slightly above last year, we will likely see some sort of modest uptick in demand in the first quarters of 2011, but don’t expect a surge in activity,” Miller predicted.