Hamptons' Real Estate Sales Jump 141.8% Year-Over-Year in Q-1, Says New Prudential Douglas Elliman Report

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According to Manhattan-based Prudential Douglas Elliman's latest Hamptons and North Fork market reports, there were 486 sales in the first quarter, 141.8% more than the 201 sales of the prior year quarter, but 13.8% below the 564 sales in the prior quarter, which was a two-year high. The last three quarters of sales activity has been consistent with the quarterly average of the past 5 years. Gains in the financial markets, Higher Wall Street compensation, low mortgage rates and improved affordability have stimulated demand. Despite economic turmoil of the past two years, the East End housing market, which is driven by its second home market, has continued to keep pace with the New York City housing market. Although there were sharp gains in the number of sales, up from levels not seen in at least six years, listing inventory rose. There were 2,318 listings, up 1.3% from 2,289 listings in the same period last year and up 7.4% from 2,159 listings in the prior quarter. Re-sale shadow inventory, which consists of listings that were removed from the market in the prior year due to unfavorable market conditions, is being added to the current market. The recent inventory increase is consistent with a seasonal pattern of a rising number of listings after the first of the year as sellers anticipate higher demand in the spring. As a result of a rising number of sales and stable inventory, the rate of absorption--the number of months to sell off existing inventory at the current pace of sales--was 14.3 months, down from 34.2 months in the same period last year and slightly above the 13.1 month absorption rate of the past four years.

Days on market and listing discount declined

The overall days on market and listing discount posted declines due to the sharp increase in sales activity. The days on market--number of days from last list price change to contract date-- fell to 156 days, down from 182 days in the prior year quarter and down from 175 days in the prior quarter. Listing discount--the percent spread between the listing price at time of contract and the contract price--also was impacted by the increase in the number of sales. The listing discount was 11.6% down from 12.1% in the prior year quarter and down from 12.5% in the prior quarter.

Price indicators rose due to more high end sales

The median sales price of an East End property was $800,000, up 32.2% from $605,000 in the same period last year and up 14.1% from $701,161 in the prior quarter. Average sales price showed a similar pattern rising 42.3% to $1,567,580 in the first quarter from $1,101,230 in the prior year quarter and up 19.4% from $1,313,264 in the prior quarter. The gains in the overall price indicators were skewed higher by an increase in high-end sales activity. There were 28 sales at or above the $5,000,000, four times the 7 sales in the same period last year. The median sales price of the top quintile of all East End sales was $3,450,000, a two and a half year high.

East End market continued to show improvement

Despite weak economic conditions, tight mortgage lending and elevated unemployment, the Hamptons and North Fork housing markets are showing improvement as well as keeping pace with the New York City market. The Wall Street bonus pool was up 17% year-over-year and up 25% per person, but was not anticipated to have as much impact as in prior years. The increased demand appears largely attributable to improved affordability after a lower level market value was established from the onset of the credit market turmoil in the autumn of 2008. The first quarter of 2010 was a continuation of improved market conditions that began in the third quarter of 2009.

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Hamptons Market - Number of sales surged, more activity at high-end

More sales, less inventory compared to prior year quarter

The number of sales surged 173.1% to 396 sales from 145 sales in the prior year quarter, but slipped 3.2% from 409 sales in the prior quarter. The rise in the number of sales was the largest gain over a one year period in the six years this metric has been tracked for this report series. The large increase was attributable to the abnormally low level of sales activity in the first quarter of 2009 rather than to an unusually large number of sales in the first quarter of 2010. This aberration was caused by the nearly "frozen" market conditions of early 2009 as potential buyers found it difficult to make a commitment to purchase a home given the economic turmoil that began at the end of 2008. Listing inventory posted a modest decline, down 2% to 1,640 units from 1,673 units in the prior year quarter despite the 173.1% increase in the number of sales. The modest decline was due to an increase in the number of new listings re-entering the market after being pulled from the market in the prior year.

Price indicators jumped from prior year quarter

The median sales price was $908,500, up 34.6% from $675,000 in the prior year quarter, but down 1% from $917,900 in the prior quarter. Average sales price was up 33.5% to $1,753,608 from $1,313,735 in the prior year quarter and up 10.5% from $1,587,618 in the prior quarter. The significant jump in both price indicators over the year was due to a shift in the mix toward larger property sales, which had been disproportionately less active at this time last year. As a result, both price indicators were skewed by this phenomenon since price levels were generally flat in 2010. Evidence of price skew can be seen in the breakout by quintiles. The rise in median sales price compared to the prior year quarter progressively increased in each subsequent quintile beginning with 19.5% in the first quintile and increasing 25%, 34.6%, 40% and 44.5% respectively. A similar pattern was seen in the prior quarter with a 6.7% decline in median sales   price for the first quintile, followed by a 2.1% increase, a 1% decrease and a 5.7% and 6% increase, respectively.

Days on market and listing discount rose

Both the listing discount and days on market expanded over the year, consistent with the small decline in inventory despite the sharp gains in number of sales. The average days on market was 158 days, 12 days slower than 144 days in the same period a year ago, but down sharply from 180 days in the prior quarter. Listing discount showed a similar pattern, rising to 12.2% from 11.2% in the prior year quarter, but was below the 13.5% seen in the prior quarter.

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. Housing prices east of the canal tend to be higher than west of the canal for similar reasons. Over the past two years this general pattern has been in disarray due to the limited amount of sales activity at the high end of the market with the emphasis placed on the smaller properties. In 2010, there has been some indication that the market is returning to previously established patterns. Properties to the south of the highway and east of the canal were once again significantly higher than their counterparts to the north and west respectively. The change was brought about by the return of more higher-end sales in the region. Properties located south of the highway had a median sales price of $1,187,500, 86.3% above the $637,500 of the prior year quarter and 47.1% higher than the prior year quarter result of $807,500. Properties to the north had a lower median sales price than properties to the south had, rising 18.6% to $8 12,500 from $685,000 year-over-year and were 16.7% below the $975,000 of the prior quarter. Properties located east of the canal had a median sales price of $1,275,000, 67.8% above $760,000 in the prior year quarter and 14.1% higher than the prior quarter result of $1,117,000. Properties to the west of the canal fell 6.6% to $512,500 from $548,500 in the same period last year and fell 6.8% from $550,000 in the prior quarter.

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North Fork Market - Price indicators and number of sales up sharply.

Price indicators rose

The median sales price of a property on the North Fork was $516,000, up 16.3% from $443,500 in the prior year quarter and up 14.7% from $450,000 in the prior quarter. Average sales price followed the same pattern, rising $35.9% to $749,057 from $550,994 in the same period last year and up 27.1% from $589,325 in the prior quarter. When analyzed by quintiles, there were higher gains in the upper end of the market. The median sales price in the first quarter compared to the same period a year ago was up 3.6% and in subsequent quintiles the increases were 11.4%, 16.3%, 18.5% and 49.5% respectively. This pattern had the effect of skewing the price indicators higher when actual individual property prices have been generally stable so far in 2010.

Number of sales and listing inventory rose

There were 90 sales in the first quarter, 60.7% more than the 56 sales in the prior year quarter, but down 41.9% from 155 sales in the prior quarter. Sales on the North Fork accounted for 18.5% of all sales and 8.8% of total sales dollars on the East End. Despite the gain in sales, market share was higher for both categories in the same period a year ago suggesting that the Hamptons to the south was hit harder last year than the North Fork. Market share for sales in the year ago quarter was 27.9% and 13.9% for sales dollars. Listing inventory was 678 properties in the first quarter, up 10.1% from 616 listings in the prior year quarter and up 29.1% from 525 sales in the prior quarter. With the year-over-year increase in sales, the rise in inventory reflects the introduction of re-sale shadow inventory to the current market--properties that had been removed from the market last year by sellers who opted out until market conditions had improved.

Days on market and listing discount declined

The days on market fell 46.5% to 150 days from 280 days in the prior year quarter, a recent high water mark. Days on market was 10 days faster than the 160 day average set in the prior quarter. The increase in the number of sales over the past year reflected the rise in demand, which reduced the amount of time it took to sell an average property. Listing discount was 8.8% in the first quarter, down from 14.3% in the prior year quarter and down from 9.9% in the prior quarter.


 

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Luxury Market - Price indicators spiked as listing inventory fell

Price indicators showed double-digit gains

Median sales price was $5,484,934 in the first quarter, 34.2% higher than $4,087,500 in the
prior year quarter and 21.9% above $4,500,000 in the prior quarter. Average sales price followed the same pattern, rising 45.7% to $6,931,669 from $4,759,070 in the prior year quarter and up 27.5% from $5,434,923 in the prior quarter. The top five markets by average sales price in the luxury segment were Sag Harbor, Wainscott, Southampton, Bridgehampton and East Hampton. Southampton and East Hampton each had the most sales within the luxury market. In the overall luxury market there were 28 sales at or above the $5,000,000 threshold, compared to 7 sales in the prior year quarter and up from 24 in the prior quarter.

Days on market and listing discount stabilized

By definition the luxury market is the top 10% of all sales during the quarter, it accounted for 44.6% of total dollars, up from 43% and illustrating the larger impact of the high-end market on the East End this quarter. This rise in activity was evident in the 39.1% decline in listing inventory to 286 units, down from 470 units in the prior year quarter and down 7.1% from 308 units in the prior quarter. Days on market was 8 days faster this quarter falling to 130 days from 138 days in the prior year quarter. Listing discount was 11.5%, essentially unchanged from 11.6% in the prior year quarter.


 

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Condo Market - Number of sales and price indicators rose

Listing inventory up

There were 28 condo sales in the first quarter, nearly three times the 9 sales that occurred in the prior year quarter and 4 more than the 24 sales in the prior quarter. Market share of condo sales is typically between 4% and 6% averaging 5.5% over the past 4 years, consistent with the 5.8% market share in the first quarter. Despite the rise in the number of sales, there was a 38% increase in listing inventory to 149 units, from 108 units in the prior year quarter and up 39.3% from 107 units in the prior quarter. The Hamptons accounted for 89% of all condo sales as compared to 11% for the North Fork. Listing discount increased to 8.2% from 6.4% in the same period a year ago and days on market fell sharply to 120 days from 272 days over the same period.

Price indicators rose

The median sales price was $475,000 in the first quarter, up 22.9% from the same period last year and down 10.4% from $530,000 in the prior quarter. Both the Hamptons and the North Fork had a median sales price of $475,000 in the first quarter. Average sales price was $478,875 in the first quarter, up 27.9% from $374,366 in the prior year quarter and up 1% from $474,338 in the prior quarter.


 

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