Sales of Hamptons homes costing less than $1 million outpaced sales of higher-end mansions during the third quarter, dragging down average prices for all houses on Long Island’s East End, according to market reports released Thursday.
The median sales price in the Hamptons dropped 10%, to $765,000, in the third quarter from the year-earlier period, according to a report by Prudential Douglas Elliman and Miller Samuel Inc. Similarly, a separate report by the Corcoran Group recorded a 12% dip in median sales price for the quarter.
Some of the activity in the lower end of the market can be attributed to record-low interest rates driving more folks to buy their first home in the region, according to Jonathan Miller, CEO of appraisal firm Miller Samuel. Those first homes tend to be priced below $1 million.
“More people are being drawn into the market,” Mr. Miller explained.
Overall, the number of sales in the Hamptons rose 1.8%, to 405, in the quarter from the year-earlier period, according to Elliman/Miller. The Corcoran report tracked $634 million worth of homes sold in the quarter, down 4% from the third quarter of 2011, further indicating that lower-priced homes drove sales activity for the quarter.
But homebuyers shouldn’t get too excited, since houses in the playground for the rich aren’t exactly getting cheaper. Instead, multimillion-dollar homes just aren’t being put up for sale. “It’s not about discounting prices—the properties that are trading are priced appropriately,” said Ernie Cervi, an executive managing director at Corcoran in Bridgehampton, L.I.
During the third quarter, 177 homes sold for less than $1 million, up 25% from the same time a year ago, according to reports by Brown Harris Stevens and Halstead Property. That segment represented 60% of the entire sales market for the quarter, while the sale of $8 million-plus homes represented a mere 2% of all sales. Only 15 houses sold for more than $5 million, compared to the third-quarter average of 23 for the past five years, Mr. Miller said.
The tough news for new buyers is that prices are expected to rise modestly because of the lack of inventory. According to the Elliman/Miller report, the number of homes for sale in the Hamptons fell about 16%, to 1,302. That figure is well below the five-year average of 1,550.
Additionally, homes that are for sale are being snatched up quickly. In the third quarter, it took 9.6 months to sell the current number of homes for sale; this time last year, it took close to a year—11.7 months. That’s the fastest third-quarter pace in more than five years, Mr. Miller said, noting that the third quarter tends to be among the busiest in terms of sales activity, right behind the summer months.
“We’ll see stronger pricing in 2013 because of the lack of supply,” he predicted.