Hamptons Home Sales Surge 22.9% in Q4, Reports Prudential Douglas Elliman

---

Price indicators showed stability

(NEW YORK, NY) - The median sales price of an East End residential property was $701,161 in the fourth quarter, 1.6% higher than $690,000 in the same period last year and 0.2% above $700,000 in the prior quarter. This is the first year over-year increase in median sales price since the first quarter of 2008. Average sales price was $1,313,264 in the fourth quarter, down 11% from $1,474,771 in the same period last year and down 2% from $1,339,510 in the prior quarter. The disparity between the median sales price, which removes outliers, and average sales price was attributable to general decline in prices at the high end of the market after rising faster than the overall market in prior years.

Surge in the number of sales

There were 564 sales in the fourth quarter, 55.4% more than 363 sales in the same period last year and 22.9% more than the 459 sales of the prior quarter. The number of sales was at its highest level in more than two years, when there were 613 sales in the fourth quarter of 2007. Even with the surge in activity, the number of sales are roughly half those seen at the peak in the second quarters of 2004 and 2005 with 1,052 and 1,051 sales respectively. However sales activity is consistent with levels seen before the housing boom began in late 2003. Despite the surge in the number of sales, listing inventory was 2,159 at the end of the fourth quarter, up modestly from 2,079 listings in the same period last year, but down 10.7% from the prior quarter. Sellers began returning to the market last spring to take advantage of the uptick in sales activity.

Days on market and listing discount expanded

Despite the jump in the number of sales, the time it took to sell the average property expanded to 175 days from 150 days during the same period last year, but was less than the 198 days seen in the prior quarter. The expansion of marketing time reflected the inclusion of more sales that were on the market longer, which skewed the number of days on market higher, rather than suggesting that properties were simply taking longer to sell. Listing discount, the spread between the contract price and the list price at time of contract, declined as a reflection of the increased number of sales. The listing discount was 12.5%, down from 15.4% in the prior year quarter and down from 16.9% in the prior quarter.

East End showed more stability despite weak regional economy

Despite the return of the number of sales to near-normal (pre-housing boom) levels and the stability of price levels, the outlook for the next year continues to be determined by the direction of the economy. High national and regional unemployment levels and tight credit will likely restrict improvement in the housing market over the next year. The impact of Wall Street bonuses, once a key driver of demand in recent spring markets, will be watered down despite a reported 40% increase over last year's levels. This is largely due to a higher portion of payment in restricted stock and deferred cash. However, the correction in price levels has brought in new buyers who are taking advantage of improved affordability, low mortgage rates and the federal tax credit program.

---

Hamptons Market - Listing inventory expanded while price indicators are mixed

Price indicators showed mixed results

The median sales price of a Hamptons property was $917,900 in the fourth quarter, up 4.9% from $875,000 in the same period last year and up 13.3% from $810,000 in the prior quarter. The median sales price was at its highest level in 18 months. The average sales price was $1,587,618 in the fourth quarter, down 12.3% from $1,810,722 in the same period last year, but up 1.1% from $1,571,029 in the prior quarter. The disparity between the average and median sales price indicators as compared to the same period last year was a reflection of the shift in the sales mix to smaller properties over the past year. A rise in quarter-over-quarter median sales price of the lower three price quintiles suggests rising demand in the lower half of the market.

Numbers of sales surged as listing inventory trended higher

There were 409 sales in the fourth quarter, 59.1% more than 257 sales in the same period last year and 20.6% more than 339 sales in the prior quarter. The number of sales has been trending higher in each successive quarter with more than double the sales activity in the fourth quarter as compared to the first quarter, which had 145 sales. Listing inventory reached 1,634 properties, 6% more than the 1,541 units in the same period last year and 5.8% less than the 1,735 units in the prior quarter. As a result, the monthly rate of absorption--the number of months it would take to sell existing listing inventory at the current pace of sales activity--has been falling over the past year. The fourth quarter rate was 12 months, down from 18 months last year at this time and down from 15.4 months in the prior quarter. The absorption rate spiked in the first quarter of 2009 to 34.6 months as sales dropped sharply and listing inventory expanded. The Hamptons submarket accounted for 72.5% of all East End sales this quarter, and accounted for 87.7% of total sales volume and has remained consistent with these results for the past 3 years.

Listing discount declined as days on market rose

The days on market for the Hamptons averaged 180 days, up from 158 days in the prior year quarter and down from 213 days in the prior quarter. Listing discount declined to 13.5% from 16.2% in the prior year quarter and down from 18.7% in the prior quarter. The change in both of the metrics from the prior quarter is consistent with the decline in inventory and surge in sales activity.

South of the highway continued to lead all markets

The proximity of properties to the east and west of the Shinnecock Canal and north and south of Route 27 are popular reference points for market participants although the wide array of housing stock makes their reliability limited. The market to the south of the highway is generally characterized by having the highest priced housing in the region with limited availability of open land to the waterfront. The shift in mix to smaller property sales and the decline in sales activity and price levels at the upper end of the market have resulted in a significant skew in median sales price. Properties to the north of the highway had a median sales price of $975,000, 30% above the $750,000 median sales price of the prior year quarter and 62.5% above the $600,000 in the prior quarter. The median sales price of properties to the south of the highway was $807,500, down 30.5% from the prior year quarter median sales price of $1,162,500 and down 56.1% from the $1,840,000 median sales price of the prior quarter, which was an anomaly. The median sales price of a property to the east of the canal, which overlaps the south of the highway market, was the highest price market segment at $1,117,000, or 8.3% below the prior year quarter result of $1,217,500. It was 13.7% above the $982,500 median sales price of the prior quarter. Properties to the west of the canal had a median sales price of $550,000, or 4.8% above the median sales price of $525,000 in the prior year quarter and unchanged from the prior quarter.

---

North Fork Market - Price indicators declined as number of sales surged

Number of sales jumped as listing inventory fell

There were 155 sales in the fourth quarter, up 46.2% from 106 sales in the prior year quarter and up 29.2% from 120 units in the prior quarter. As a result of the rise in sale activity, fourth quarter listing inventory declined 2.4% to 525 listings from 538 listings in the prior year quarter and 23.2% from 684 listings in the prior quarter. The inventory level in the prior quarter was the highest level observed in the four years this metric has been tracked. The North Fork submarket accounted for 27.5% of all East End sales this quarter and accounted for 12.3% of total sales volume in the fourth quarter.

Price indicators declined

Median sales price for the fourth quarter was $450,000, down 10% from $500,000 in the same period last year and was down 5.8% from $477,500 in the prior quarter. Average sales price followed the same pattern seeing a decline of 10.7% to $589,325 from $660,249 in the same period last year and down 14% from $685,467 in the prior quarter. This decline was reflected by weaker price trends at the upper end of the market. Median sales price by quintile reflected double digit declines in the third and fourth highest quintiles compared to the prior year quarter and double digit declines in the fourth and fifth highest quintiles in the prior quarter. The median sales price of the middle of the market or third quintile was $434,500, 13.1% below $500,000 in the prior year quarter. The fourth quintile median sales price was $585,000, 15.2% below the $690,000 median sales price during the same period last year.

Days on market expanded as listing discount contracted

The listing discount was 9.9% in the fourth quarter, down from 13.3% in the same period last year and down from 11.8% in the prior quarter. Despite the decline in inventory, days on market expanded over the same period. The average property took 160 days to sell, a month longer than the 130 days in the same period last year and 5 days longer than the 155 days in the prior quarter.

---

Luxury Market - Listing inventory and price indicators declined

Price indicators were mixed from prior quarter

Median sales price was $4,500,000 in the fourth quarter, 3.4% below $4,660,000 in the same period last year, but 5.3% above the $4,275,000 in the prior quarter. Average sales price posted a larger decline as the higher end of the luxury market was weaker than the preceding quarters. Average sales price was $5,434,923 in the fourth quarter, 20.7% below $6,857,781 in the same period last year and 6.9% below $5,836,304 in the prior quarter. The five submarket areas with the highest average sales price within the luxury market in the east end were Westhampton Beach, Bridgehampton, Sagaponack, Montauk and East Hampton.

Listing inventory dropped

There were 308 units listed for sale in the fourth quarter, 20% below the 385 listings on the market in the same period a year ago and roughly the same number of listings as the prior quarter. Although inventory declined, the listing discount expanded to 17.1% from 9% in the prior year quarter and was the same as the prior quarter discount. Days on market expanded too, rising to 205 days from 153 days in the same period last year and from 175 days in the prior quarter.

---

Condo Market - Price indicators skewed by larger units

Listing inventory rose as number of sales declined

There were 24 sales in the fourth quarter, 25% less than 32 sales in the prior year quarter and 4.3% more than 23 sales in the prior quarter. Condo sales represented 4.3% of all sales in the East End. Condo sales in the Hamptons comprised 71% of all East End condo sales, consistent with the overall market. Listing inventory expanded over the same period. There were 107 condo listings on the market, 75.4% more than the 61 units in the same period a year ago and 28.9% more than the 83 listings in the prior quarter. The small number of sales in the sub market subject the indicators to potential skew.

Listing discount declined as days on market expanded

Days on market jumped to 206 days, up from 150 days in the prior year quarter and up from 132 days in the prior quarter. Although this market segment is subject to skew because of its small size, the expansion of listing inventory would likely expand this indicator. The spread between the list price and contract price, otherwise known as listing discount, was 7.7% in the fourth quarter, down from 16.3% in the prior year quarter and down from 9.6% in the prior quarter.

---