Activity was up, but average and median prices were down in the Hamptons in the third quarter of 2012, reports from leading brokerages show. A flurry of activity in the lower end — especially the sub -$1 million range — bolstered the market overall, as the area continues its long, slow recovery from the Lehman Brothers collapse, industry analysts told The Real Deal.
The number of sales in the Hamptons in the third quarter was 443 this year, up 8 percent from 412 year-over-year, numbers from the Corcoran Group show. But the average and median sales prices declined 11 and 12 percent, respectively, the report says, to $1.32 million from $1.43, and to $775,000 from $879,000.
Sales below $1 million were up 17 percent, and constituted 60 percent of overall sales in the region, said Greg Heym, chief economist for Terra Holdings, parent company of BHS Hamptons and Halstead Property. “There were not a lot of closings at the high end of the market,” Heym said. “A lot of the inventory that has built up in this market has been in the middle to lower range.”
Meanwhile, according to Prudential Douglas Elliman’s report, the market share of sales over $5 million dropped from 57 percent to 37 percent year-over-year. But the next quarter could prove more lucrative, with legislative changes on the table. “With tax changes slated to take effect, I would expect an uptick in high-end closings in the fourth quarter of 2012,” Heym said.
Not that brokers are in panic mode over the dearth of high-end sales. “Personally, I look at number of transfers,” said Stuart Epstein, Managing Director of East Hampton for Devlin McNiff Halstead Property. “I don’t worry too much about median prices and average prices — the super-high end is sort of a world unto itself.”
Sales volumes in most East End markets were up year-over-year, Epstein noted. In East Hampton there were 43 sales in the third quarter of 2011, which sprung to 59 this year. In Sag Harbor and Westhampton, sales totaled 46 and 77 respectively, up from 39 and 65 year-over-year.
“That uptick is primarily due to falling mortgage rates,” said Jonathan Miller, author of the Prudential Douglas Elliman report. He also cautioned that inventory would soon be strained, as it has been in Manhattan and Brooklyn. Listing inventory in the Hamptons and North Fork together has fallen 14 percent year-over-year, according to figures from Elliman.
“[The Hamptons] suffered longer because it’s a secondary market” Heym said. But, “the number of sales has been rising substantially the last couple quarters, and it’s not like there is a crop of homes about to hit the market,” Heym said.
Buyers have been primarily from the financial services industry, peppered with international investors, though foreign interest has been limited, brokers and analysts said.
Miller said pricing on the high-end might firm up soon however, if anticipated tax changes spur trades, as it did last time tax changes were expected, in the third and fourth quarters of 2010.
“I think it’s sort of this combination of uncertainty and lower negative equity,” Miller said, keeping owners in the above $5 million range from listing their properties. But that could change if owners become worried that George W. Bush’s capital gains tax rates will be allowed to expire under the next president. “It modified behavior in 2010 and it certainly could happen again now.”