Hamptons House Prices Fall Amid Wall Street’s Decline (Update5)
By Sharon L. Lynch and Laura Marcinek
July 16 (Bloomberg) — The Hamptons housing market is feeling the heat of Wall Street’s meltdown.
Second-quarter sales volume dropped 29 percent and the median price fell 11 percent to $735,000 from a year earlier in the resort communities on the East End of New York’s Long Island, Suffolk Research Service Inc. said in a report today.
Transactions are dropping as financial firms have cut more than 93,000 jobs and taken more than $416 billion in mortgage- related losses and writedowns. The retreat in global stock markets, waning consumer confidence and the deepening housing recession are also keeping prospective buyers at bay.
“People are buying with their heads much more,” said Diane Saatchi, a senior vice president of New York-based brokers Corcoran Group. “Their lifestyles are very much the same, but people are being much more cautious.”
The median price, the level at which half the homes in a market sell for more and half sell for less, changed because fewer high-end houses traded hands, Saatchi said. That doesn’t mean values are necessarily falling, she said.
“Last year’s $2 million house is still this year’s $2 million house,” Saatchi said. “The difference is this year nobody bought it.”
Rich and Famous
In Southampton, the median price dropped 8.6 percent to $891,000. Sales volume fell 35 percent to 257 homes. In East Hampton, prices fell 11 percent to a median of $1,000,000, Suffolk Research said. Volume there fell 40 percent to 120 homes.
The Hamptons are the summer haven for New York’s rich and famous, from Wall Street executives to celebrities. Owners there include billionaire Ronald Perelman; Ron Baron, founder of Baron Capital Management; Academy Award-winning director Steven Spielberg and comedian Jerry Seinfeld.
For those hesitant to buy, Corcoran’s Web site lists 1,358 Hamptons places for rent in August through Labor Day. A three- bedroom contemporary house in Amagansett with its own private beach goes for $100,000 for the month, including boat mooring. On the cheaper end, $500 fetches a bedroom in a shared house in Sag Harbor for the weekend, according to an ad on Craigslist.org.
Sales and rentals are inversely related, said Judi Desiderio, chief executive officer of Town & Country Real Estate in East Hampton, New York.
“Rentals this year were off the charts,” Desiderio said, adding that 19 percent of Town & Country’s rentals went to Europeans because of increased advertising overseas and the weakness of the dollar.
The area is known for its multimillion-dollar beachfront estates. In January 2006, Edgar Bronfman Jr., chief executive officer of Warner Music Group Corp., paid $31 million for a Bridgehampton estate and an adjacent lot. In 2007, Baron bought 40 acres in East Hampton for a record $103 million.
Hamptons prices have jumped almost 70 percent since 2003, up from a median of $436,500. By comparison, the median price of an existing U.S. home climbed 19 percent to $208,600 in the five years ended in May, according to the Chicago-based National Association of Realtors.
Prices in the Hamptons continued to climb through 2007, even as median prices in the rest of the nation fell for the first time since the Great Depression.
The price decline reported today marks the second consecutive quarterly drop for the beachside towns, Suffolk Research said.
“Before they lose their money, they get scared they will lose their money,” Suffolk Research President George Simpson said in an interview. “Either one will cause them not to buy.”
“Everybody’s cautious and everybody’s scared,” Simpson said.
In Southold, prices fell 8 percent to $507,500 and sales dropped 19 percent.
On Shelter Island, the median price rose 34 percent to $1.13 million, while sales fell 26 percent to 17. The cost to buy in Riverhead also rose, up 9.6 percent to a median of $411,100, while transactions gained 3 percent to 103 properties.
The survey by Hampton Bays, New York-based Suffolk Research covers 576 sales in Southampton, East Hampton, Riverhead, Southold and Shelter Island, about 100 miles east of Manhattan.
The number of sales in all five towns was the lowest for a second quarter in at least five years. In the 2004’s second quarter, 1,198 houses sold.