Home prices in New York’s Hamptons, the Long Island oceanside retreat for summering Manhattanites, declined in the third quarter as mortgage rates near record lows focused buyer attention on cheaper properties.
The median price of homes that sold in the period fell 10 percent from a year earlier to $765,000, according to a report today by New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. In the Hamptons and North Fork, the median for luxury properties, defined as the top 10 percent of all sales, fell 23 percent to $4.23 million. About 63 percent of luxury deals were for properties under $5 million.
“Multimillion-dollar properties, that’s the brand of the Hamptons,” said Jonathan Miller, president of Miller Samuel. “But there’s an expansion to that, so its not as one- dimensional as it was during the peak.”
Property prices that are 30 percent below their 2007 peak have drawn new buyers to the second-home market in the Hamptons, according to Miller. Homes priced at less than $1 million, which draw buyers who rely on mortgages, accounted for 70 percent of sales in the quarter as borrowing costs approached all-time lows, he said.
The average rate for a 30-year fixed U.S. home loan fell to a record-low 3.36 percent earlier this month, according to McLean, Virginia-based mortgage-financier Freddie Mac.
“If you look at monthly payments on mortgages, the prices have become very competitive with rental prices,” said Terry Thompson, a Southampton-based broker with Prudential Douglas Elliman. “Low interest rates and lower-priced homes are giving renters an unprecedented opportunity to own versus rent.”
Thompson helped Gennaro Vendome and his wife, Carol, find a four-bedroom home in Hampton Bays for $490,000, a 4.9 percent discount from its original asking price, after they decided to sell the Montauk property that they owned since 2005 and move further west. They chose Hampton Bays after Thompson found a place in the town for their daughter’s in-laws for $615,000.
The Manhattan couple had been searching for a new second home in a town that was closer to the city and offered amenities such as movie theaters within a shorter drive, according to Gennaro Vendome. The trade was well-timed, he said. The couple sold the Montauk home for a profit and completed the new transaction with cash.
“There are some real great deals out there, great homes,” said Vendome, 66, a real estate investor who owns apartment properties in Manhattan and Queens. “The home we got, I would say in the pre-banking collapse days, that would be close to a million-dollar home.”
Brown Harris Stevens, which also released a report on the Hamptons today, said the number of homes sold for less than $1 million in the quarter increased 25 percent from a year earlier. The surge pushed down the median price of single-family properties that changed hands in the period to $850,000, a 6 percent drop from the third quarter of 2011, according to the brokerage.
“There’s a lot of people worried about Wall Street,” said Gregory Heym, chief economist for New York-based Brown Harris Stevens. “Bond yields are at record lows, and people look to real estate to provide both the stability and a higher rate of return.”
The number of Hamptons homes on the market declined 16 percent from a year earlier to 1,302 as owners refrained from listing their properties, Miller said. The absorption rate, or amount of time it would take to sell all the listed homes at the current pace of deals, was 9.6 months, down from 11.7 months a year earlier.
“Sellers become buyers, and if they can’t trade up, they wait,” Miller said.
With the Federal Reserve signaling it will keep borrowing costs low through 2015, sellers aren’t in a rush to capitalize on rising buyer demand, he said.
“The sense of urgency has been removed,” Miller said. “Sellers aren’t worried that they’re going to miss the market.”
In the East Hampton area, purchases climbed 14 percent in the third quarter from a year earlier, according to a report this month by brokerage Town & Country Real Estate. The combined dollar value of the 48 homes that sold jumped 36 percent from a year earlier to $71.5 million, while the median price fell 16 percent to $712,500.
In Bridgehampton, purchases climbed 23 percent to 32 deals, while the median price fell 34 percent to $1.63 million, Town & Country said. Those figures also include the areas of Water Mill and Sagaponack.