July 30 (Bloomberg) -- Home prices in the Hamptons, the summer haven of New York financiers and socialites, fell almost 12 percent in the second quarter from a year earlier as Wall Street firms cut jobs and the economy teetered near a recession.
Sales dropped 26 percent and the median price slid to $970,000 in the resort towns on the East End of Long Island, New York-based broker Prudential Douglas Elliman Real Estate and appraiser Miller Samuel Inc. said in a report today.
We used to think of the Hamptons as insulated and that's not the case,'' said real estate developer Arthur Rauscher, who is trying to sell his four-bedroom custom-built East Hampton house for the second time in three years. He's asking $1.3 million and hasn't received any offers. It's not what it used to be.''
The housing slump is hitting the Hamptons as financial firms have announced more than 76,000 U.S. job cuts sparked by mortgage- related losses and writedowns. The nation's economic expansion may slow to the weakest pace in six years in the fourth quarter, according to a Bloomberg News survey, and New York Governor David Paterson has said a 20 percent drop in securities industry bonuses this year will cut state revenue by $700 million.
Homes in the Hamptons -- where billionaire Ronald Perelman, director Steven Spielberg and Sex and the City'' star Sarah Jessica Parker own -- took an average of 143 days to sell in the quarter, up 18 percent from a year earlier, said closely held Miller Samuel. The company appraised more than $5 billion in property in the past year. Sellers in towns including Southampton, Quogue and Amagansett got an average of 9 percent less than their final asking price.
Sitting Out Slump
The median price, the level at which half the homes sell for more and half for less, is dropping in part because fewer high-end houses are changing hands, Diane Saatchi, a senior vice president of New York-based brokers the Corcoran Group, said in a July 16 interview.
Luxury homes remain the healthiest segment in this market of former potato farms turned summer retreats, a place where money manager Ron Baron last year spent $103 million for 40 acres.
Sales in the luxury category, defined as the top 10 percent by median price, rose 10 percent in the quarter to $4.41 million, Miller Samuel said. Volume dropped almost 12 percent to 54 properties. Those figures include both the Hamptons and the North Fork of Long Island.
Three Ponds Sale
On the North Fork of the island, east of Riverhead, the median price rose 13 percent to $605,000 and the number of sales jumped almost 29 percent to 189, Miller Samuel said. Those areas are attracting buyers priced out of the Hamptons, Herman said.
Among the most expensive properties in the area that have yet to sell is the Three Ponds estate built by former real estate mogul Edward S. Gordon and put on the market about three years ago by his surviving family.
The $68 million, 60-acre property has its own golf course, tennis courts and rose gardens.
It's for a specific kind of person,'' broker Susan Breitenbach of Corcoran said in an interview. Somebody would have to really use it and use as a family compound or a corporate retreat.''
Breitenbach sold $40 million worth of property in the last eight weeks and doesn't think potential buyers with the resources to make a Three Ponds-style purchase will be deterred by Wall Street's results.
If you have money and you're in New York, it's really about the Hamptons and that hasn't changed,'' Breitenbach said. You can get a great caterer, a great masseuse, and great yoga.''
Hamptons prices have jumped almost 70 percent since 2003, up from a median of $436,500, according to data collected by Hampton Bays-based Suffolk Research Inc. By comparison, the median price of an existing U.S. home climbed 19 percent to $208,600 in the five years ended in May, according to the Chicago-based National Association of Realtors.
Prices in the Hamptons continued to climb through 2007, even as median prices in the rest of the nation fell for the first time since the Great Depression.
A survey released July 16 by Suffolk Research found that in Southampton, the median price dropped 8.6 percent in the second quarter to $891,000. Sales volume fell 35 percent to 257 homes. In East Hampton, prices slid 11 percent to a median of $1,000,000 and volume there fell 40 percent to 120 homes.
In Southold, on the North Fork, prices fell 8 percent to $507,500 and sales dropped 19 percent. On Shelter Island, the median price rose 34 percent to $1.13 million, while sales fell 26 percent to 17, Suffolk Research said.
Rauscher, the developer and real estate broker trying to sell his house in East Hampton, is offering the property for a second time after pulling it off the market in 2005.
The house, in the same town where Martha Stewart owns, includes a heated pool, hot tub, surround sound system, gym, and bathrooms with motorized skylights that open to the heavens. So far, there are no takers.
I'm not desperate to sell it, not by any sense of the word,'' Rauscher said. If I sell it, I would like to buy something in North Carolina.''