As buyers shift toward the lower end of an oversaturated luxury segment in the Hamptons, both median and average sales prices saw a double-digit slip in the third quarter of this year, according to a Douglas Elliman report released Thursday.
Over the three month period from July to September, the median sales price of luxury Hamptons homes, which comprise the top 10% of the sales, dropped 11% year-over-year to $5.56 million, while the average price was down 11.6% to $7.55 million
The softness in pricing was mainly due to an oversupply in the luxury market, said Jonathan Miller, chief executive of real estate appraisal and consultant firm Miller Samuel and author of the Douglas Elliman report.
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"The luxury inventory is still expanding," Mr. Miller said, noting that there were 322 active listings during the last quarter, a 22.4% increase from a year ago. As a result, luxury homeowners took an average 15% discount off of their asking prices to sell, compared to 10% in the third quarter of 2016.
The decline in pricing was also caused by a trend wherein more luxury buyers shifted toward homes valuedbetween $1 million and $5 million, or what Mr. Miller refers to as the "Hamptons Middle." While the number of homes priced $5 million to $10 million fell 22.5% year-over-year, the number of sales under $5 million increased 6.7%.
However, sales activity overall remained solid. The number of homes sold for at least $3.3 million—the threshold for the luxury segment—was 52,unchanged fromthe same period last year. There were 10 homes sold for at least $10 million, compared to 11 sales during the third quarter last year.
Corcoran Group’s Hamptons report, also released Thursday, had similar findings. Corcoran covers transactions reported in the third quarter, instead of closed sales, which is what the Douglas Elliman report is based on.
There were 60 luxury sales (top 10% of the market) with a median price of $5.643 million, down 1% from a year ago, according to the Corcoran Group.
The most expensive sale in the third quarter, reflected in both Douglas Elliman’s and Corcoran’s reports, was a summer rental for former President Bill Clinton and Hillary Rodham Clintonon Lily Pond Lane, which closed in August for $29 million.
A strong fourth quarter is expected
In light of the market performances in the third quarter and recent sales of some super-luxury homes, the brokerages predict a strong fourth quarter for the luxury Hamptons market.
"All indicators show a strong market continuing into the fourth quarter," said Ernest Cervi, regional senior vice president of Corcoran's East End office, adding that luxury condos are expected to gain in activity.
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There were a few high-end sales this month, which will likely be reflected in the fourth quarter market report. For one, Lasata,former first lady Jacqueline Kennedy Onassis’s $30 million Hamptons summer house, went into contract. In addition, the famed Grey Gardens home found a buyer with an asking price of $18 million, while a new build by a Sbarro pizza heir entered into sales contract for $24 million.
"Luxury sellers are getting more realistic and willing to negotiate prices the market supports," Mr. Miller said. This is happening across all the luxury markets, he added.
A rallying stock market and buyers’ confidence in the real estate market also help, said Carl Benincasa, regional vice president of sales at Douglas Elliman. "As interest rates start to climb, it’s a good time to invest stock gains in the real estate market," he said.