Crain's New York BusinessAmanda Fung
Oct. 27, 2011
Sales of homes commanding prices of $5 million and up continued to drive activity in the Hamptons, New York City's popular summer destination, in the third quarter of this year, according to two reports released Thursday.
During the third quarter, there were 30 sales of homes fitting that bill, almost triple the number racked up in the same quarter of 2010, according to Jonathan Miller, CEO of Miller Samuel Inc., an appraisal firm that released a report in conjunction with Prudential Douglas Elliman. Separately, Brown Harris Stevens reported there was a 45% jump in a broader slice of pricey pads, those priced at $2.5 million or more.
“Wall Street continued to drive the market like it did in Manhattan,” said Mr. Miller. “Foreign buyers also played a big role in the quarter.”
Overall, the number of sales in the Hamptons rose 12.4% to 398, according to the Miller Samuel and Prudential Douglas Elliman report. The median sales price in the quarter rose 22.1% to $850,000, while the average rose 18% to $1.7 million. Mr. Miller warned that the double-digit increases should not be seen as a boom in activity. Instead, he noted that they are bouncing back from slightly depressed levels of a year ago and there was more activity on the high end.
“I am happy to see a return of confidence by the high-end buyer,” said Cia Comnas, executive managing director of the Hamptons at Brown Harris Stevens. She adds that she expects strong activity to continue at least to the end of the year, based on showings she has conducted and offers on properties she is starting to receive. “Many think that prices are at a point where it would not go lower, and now is a good time to invest in quality properties in a good location; and that is what they are doing,” she said.
In fact, while sales activity is above the five-year average of 374 sales, it is still well below the 10-year average of 438, according to Mr. Miller. Meanwhile, the number of homes on the market in the Hamptons stands at normal levels. There were 1,546 listings in the third quarter, slightly above the five year average of 1,504 homes, he added.
“At the end of the day, people still trust real estate and think it's a safe bet; stocks are risky and banks provide no interest,” said Dottie Herman, CEO of Prudential Douglas Elliman, adding that for many of her high-end clients, owning a Hamptons home is a “lifestyle.”
The third-quarter results bode well for residential brokerage firms which have entered the Hamptons market in the last year or so in search of fat commissions. Earlier this month, Halstead Property returned by acquiring the Hamptons' assets of Devlin McNiff. Earlier this year, Nest Seekers International entered the market with the acquisition of Southampton's Engel & Volkers and Heddings Property Group opened its Hamptons office. They will compete for business against a host of bigger firms like Prudential Douglas Elliman, the Corcoran Group, and Town & Country as well as newer shops specializing in the area like Saunders & Associates.
“The Hamptons market is moving and firms think they can go there and get rich,” said Ms. Herman, adding that it is harder to establish a presence in that market than most think.