The tide went out dramatically on high-end sales in the Hamptons in the first quarter. It wasn’t that people have lost their appetite for multi-million dollar beachfront properties, heaven forbid. Instead, analysts are heaping blame on a huge wave of deals that sellers rushed to complete in the fourth quarter, before higher capital gains taxes went into effect.
According to Douglas Elliman data, there were only eight sales priced higher than $5 million in the first quarter of 2013. That’s a 46% drop from the same period in 2012. In contrast, a record 49 sales of $5 million or higher were logged in the fourth quarter of 2012.
There was a similar situation at the end of 2010 and beginning of 2011, said Jonathan Miller, CEO of Miller Samuel Inc., the appraisal firm that compiles and analyzes the Ellliman data. That’s when sellers feared the Bush tax cuts would not be extended, leading to 38 fourth-quarter sales in 2010 and just 11 in the following quarter.
“This is déjà vu, but déjà vu on steroids,” Mr. Miller said.
For the Hamptons market as a whole, first-quarter sales totaled 347, up 20.9% from year-earlier levels. Meanwhile, the median sales price eased by 5.1%, to $740,000, partially because of the dearth of high-end sales.
“In the Hamptons, there’s not a lot of transactions, so one or two of those big sales will make a big difference in what those prices look like,” said Dottie Herman, CEO of Douglas Elliman.
Brown Harris Stevens recorded similar trends, with the number of sales falling 13% from the first quarter and the median price slipping by 8% to $750,000.