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East End Bucks National Trend: Home Sales Up

Originally Posted: September 06, 2011

Kelly Sharo

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Southampton - No matter whose data you look at, the number of sales and the average price of sales are up in the 2nd Quarter of 2011 for the Hamptons, compared to 2010, with the high end of the market being the most active.

According to the second quarter market report for the East End of Long Island released by Brown Harris Stevens, the average residential sale price in the South Fork of $2,028,735 was up 30 percent.

"Our report reflects 361 reported sales, four percent more than a year ago; over that same period the median price - which is not as impacted by high-end sales - rose 18 percent to $1,095,000," said Cia Comnas, executive managing director of Brown Harris Stevens of the Hamptons.

According to Comnas, "The 2nd Quarter showed the increase in the high end activity which we were all seeing as showings and offers being submitted in the 1st Quarter but which were not reflected in 1st Quarter results of closed transactions."

"Activity is still price sensitive for the most part in the Hamptons - meaning that properties that are competitively priced are attracting multiple bidders. Agents are reporting that their customers who have been holding back for the last couple of years are coming forward, now ready to make a move - so we are remaining optimistic about the market."

Ann Rasmussen, a broker with Brown Harris Stevens said, "There was definitely a jump in sales in the 2nd quarter and I noticed a lot of activity in the high end new construction market, namely $5 million to $10 million in Sagaponack and points west of East Hampton. Many of these were spec houses which had been on the market for a while and finally their time had come due to price reductions and an overflow of Wall Street bonus money."

Rasmussen, who works out of East Hampton, said, "For me personally, the 2nd quarter represented closings from the 1st quarter, mostly in the $1 million to $1.5 million range. All the buyers had been looking for some time and knew the market well. I would also say that they paid 'fair' prices - not below or above market value. Finally they all got financing, but only one required a mortgage 'contingency'."

Janice Hayen at Beau Hulse Realty Group in Southampton reports that sales are strong in all markets but noted that the inventory in Southampton is lower under the million dollar mark.

"The active market jumps to the $10 million range with the huge investors that want to be here in New York and not travel abroad."

"New York is where the jobs are," Hayden said, "and we have the most beautiful beaches, the best restaurants and great shops."

Even with the unrest on Capitol Hill and the stock market reactions to the nation's economy, Hayden insists it's only going to get better. She does admit there is some fear as far as when the interest rates will go back up. "They're holding steady but we don't know for how long. Why risk the opportunity and lose leverage?"

People who have the means - doctors, lawyers, investors with cash who prefer to take a mortgage out - are the people buying. One client was a real estate broker from Florida who sold property there and reinvested in property here.

"They are buying low," said Hayden, "Why throw money into renting at $50,000 to $100,000 when you have the opportunity to purchase?"

While the average sales price is up, the median price of a one family home is down on a whole. Average sales were way up due to a number of sales on the high end of the market, which skews the market up. Median sales exclude the top and the bottom and use the middle ground.

"Median sales and are a better indicator of the market," said Rick Hoffman, Corcoran East End Senior Vice President, "The median price is down a little. What is selling has dropped."

Corcoran's 2Q combined real estate market report for the East End was down four percent but the total unit sales were up four percent while the average sales price was up 13 percent and the volume in dollars was up 18 percent.

"The real story is the high end showed a big insurgence, inventory stayed the same and selling property is priced right," said Hoffman, who works in the Southampton office.

Hoffman suggested sellers listen to their real estate agents, who take prices of comparable properties that have sold and what is listed on the market and average those two numbers to come up with a good price. "Trust that evaluation," he said.

"East End real estate is doing fairly well compared to the stock market," Hoffman noted, "The buying opportunity is incredible, with tons of inventory in every price range."

There is a lot of good value out there, including a lot of transfers in the low end. The smart investor, those with cash, are taking advantage of low interests loans and buying now rather than waiting to see if property prices plunge any more.

Andrew Saunders of Saunders Real Estate said his company has done consistently well since the fourth quarter of 2010, but they are a young company with only a few years in the business and not much to compare. He is confident that sales will continue to rise in the next quarter.

"We had an unbelievable July," he said. "Up until four weeks ago when the market began to moderate a little bit."

Reflection of the uncertainty of budget talks are a big concern and there is a strong linkage to what goes on in Washington to what goes on in the Hamptons. The East End is a private enclave and does not reflect the rest of the nation where many markets are still struggling with foreclosures.

Paul Brennan of Prudential Douglas Elliman in Bridgehampton sees the second quarter as a rebound from the slow first quarter.

"I don't understand why we feel it has to go steadily up. It's always cyclical. The ups and downs we are seeing are normal," he said.

Brennan does not think sales will continue to go up in the third quarter. "The indicators are not good," he said.

"It looked like the market would sustain itself. It looked like it was beginning to happen and there were some large sales combined with sellers in the low price range," Brennan said.

"When the market goes strong either up or down it throws fear into investors, he said, "and when investors are fearful they stop."

Right now the mood is sit and see what happens. But Brennan points out, "We have built-in forgetters."

"Remember it's not about money. It's about feeling confident. People have money. The money is there," Brennan said.

Ever the realist Brennan noted the obvious, "As an economy we can't grow upward all the time." Yet, he agrees that the Hamptons are doing remarkably well, even compared to other secondary or resort markets.

Just as the leaves will turn colors in the fall, real estate has seasons too, as Brennan points out; January to May is one season and September to November is another season as a result of closings in December and January, coinciding with the tax sessions.

Debra Reese, a Sotheby's Vice President working out of Bridgehampton, noted both sellers and buyers became increasingly realistic in terms of pricing and inventory started to come down.

"Buyers are purchasing at every price point and the Hamptons truly offer something for everyone," Reece said, "So far, we are continuing to see a lot of activity in terms of showings, offers and sales."

Catherine Debackere, a broker at Sotheby's in East Hampton agrees that the Hamptons have only grown in popularity as the place to be during the summer.

"The high end oceanfront buyers are the CEOs of investment capital such as hedge fund companies, fashion designers and celebs. The other buyers under $2.5 million are the smart investors both domestic and international coming in with cash to get a great deal on a house that has been on the market a long time. Price has come down and they negotiate an even better price! A buyer's market indeed."

"The stock market fluctuations definitely influence the real estate market however I see things improving and will stay optimistic," said Debeckere.

"It is encouraging that sales are taking place at a stable and healthy rate," said Brown Harris Steven's Comnas. "Call me crazy but I still remain optimistic as I am seeing activity now that did not slow in any significant way even with the recent ups and downs on Wall Street."

It will be interesting to see what happens next. The Long Island Real Estate Report's latest findings, in this 3Q 2011, has 30 total sales in Southampton compared with 335 for 2Q 2011 and 254 for the same period last year. East Hampton is at 13 sales so far this quarter, compared to 155 total last quarter and 125 in the 3Q of last year.

There is a long way to go but slow and steady wins the race.

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