The Hamptons, North Fork Home Sales Dip in Q-1, Says Prudential Douglas Elliman

---

According to Prudential Douglas Elliman's latest quarterly market report for the Hamptons and North Fork New York markets, sales activities dipped year-over-year from the same period one year ago.

Hamptons and North Fork Market

There were 379 sales in the first quarter, 22% fewer than the same period a year ago. The level of sales in the prior year quarter reflected the release of pent-up demand from 2009 from the limited activity earlier that year.
 
The number of sales have continued to "see-saw" each quarter since the middle of 2009. Listing inventory increased 4.9% above the same period last year, reflecting the decline in the number of sales. As a result of expanding inventory, days on market--the number of days between the last list price change and the contract date--expanded by 11 days to 167. The listing discount--the percentage difference between the listing price at time of contract and the selling price--slipped to 10.7% from 11.6% in the same period last year.

The first quarter of 2011 saw less high end activity. There were 15 sales that sold at or above $5,000,000 in the first quarter compared to 24 sales in the prior year quarter and the 38-sale spike in the prior quarter. As a result of this general shift in the mix to a more normal distribution of sales, both price indicators showed pronounced declines. Median sales price fell 22.2% to $622,500 as compared to the prior year quarter and average sales price fell 21.6% to $1,228,857 over the same period. The consistency of the percent decline between these two indicators and the top three top quintiles reflects this shift.

---

North Fork Market

The median sales price of a North Fork property was $432,500, down 16.2% from the prior year quarter. The median sales price of the first two market quintiles showed nominal increases of 0.2% and 0.9% respectively while the upper three quintiles showed year over year quarterly declines of 16.2%, 14.9% and 8.9% respectively.

The price decline was more reflective of the shift in the mix to smaller properties within each category than a decline in regional housing prices. There were 70 sales in the first quarter, the quarter that seasonally sees the least sales activity of the year in the North Fork, averaging 97 sales over the past 5 years. The number of sales was 22.2% below 90 sales in the same period a year ago. The North Fork represented 18.5% of East End sales in the first quarter and the reason why the submarket tends to see more volatility in price trends. The decline in number of sales was consistent with the 9.4% increase in listing inventory over the same period. There were 742 listings at the end of the first quarter compared to 678 in the prior year quarter.

For the past two years, listing inventory in the North Fork has remained above the 5-year average of 510 per quarter. As a result of the decline in the number of sales and increase in inventory, the monthly absorption rate jumped to 31.8 months above the year ago 22.6 month rate. The first quarter was nearly the same as the 33-month rate two years ago at the onset of the credit crunch. Days on market expanded by 18 days to 168 days in the first quarter up from 150 days in the same period last year, consistent with the expansion in listing inventory over the same period. More listing inventory tends to provide buyers with more choices and as a result, properties take longer to sell.

Despite the expansion in the time it took for a property to sell in the first quarter, the listing discount, negotiability between buyer and seller was essentially unchanged. The listing discount was 9% in the first quarter compared to 8.8% in the same period last year.

---

Hamptons Market

There was a pronounced shift in the mix toward smaller sales in the first quarter after an active high end market in 2010. There were 309 sales in the first quarter, 22% below the 396 sale total of the prior year quarter and 23.3% below 403 sales in the prior quarter. Both quarters were notable for their unusually high level of sales activity.

The prior year quarter benefitted from the release of pent-up demand after the lack of sales in 2009 and the prior quarter reflected a year-end surge after the reported rise in Wall Street compensation. The lower level of sales resulted in a modest uptick in listing inventory. There were 1,689 listings in the first quarter, 3% more than 1,640 in the prior year quarter and 5% more than 1,608 in the prior quarter. The combination of declining sales and rising inventory resulted in the increase in the monthly absorption rate to 16.4 from 12.4 in the same period last year.

However this rating of market efficiency is less than half the recent peak of 34.6 months in the first quarter of 2006 after the onset of the credit crunch at the end of 2008. While housing prices in the region were generally stable there was a pronounced shift in the sales mix toward smaller properties. This can be seen in the median sales price declines in the 3 upper market quintiles. They are consistent with the 23.1% decline in median sales price to $699,000 from $908,500 in the same period last year and the 22.3% decline in average sales price to $1,363,144 from $1,753,608 in the prior year quarter. The four submarkets relating to orientation to Route 27 and the Shinnecock Canal reflected the same general shift in mix with declines in median sales price consistent with the overall price indicator trends.

---

Condo Market

---

Luxury Market



According to Prudential Douglas Elliman, one of the characteristics of most housing markets is that properties sell above, below and at original list price no matter what type of conditions may exist. The amount of properties that sell above list price fluctuates with changes in the conditions of the market. Market share for these sales was fairly consistent through 2008 and the first half of 2009, averaging 3.8%. In the third quarter of 2009, market share for properties that sold above original list price dropped to 1.6% and then spiked to 7.1% in the next quarter. The jump was caused by the release of pent-up demand caused by the limited sales activity earlier in the same year. Market share has subsequently been drifting lower until reaching 3% in the first quarter of 2011, perhaps more consistent with the market just prior to the onset of the credit crunch in late 2008.

---