Sellers of Hamptons mansions are having to slash prices to secure sales as the glitzy summer hot spot’s luxury housing market continues to cool.
The median price for luxury homes sold in the Hamptons (the top 10% of sales) dropped almost 30% to $5.85 million in the final three months of 2016 compared with a year earlier, according to a report Thursday by Douglas Elliman Real Estate and appraisal firm Miller Samuel.
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In another sign of how much sellers are struggling, the listing discount—the change from final listing price to contract price—jumped to 15.7%, from 11.7% a year earlier as some sellers in the Hamptons have been left with little choice but to reduce prices because of growing supply and less demand.
Listing inventory increased more than 20% to 250 amid a lot of speculative development, while sales slid 14.5% to 53, according to the report. In the $5 million-plus market, sales tumbled 40%.
However, while many of those who sold their homes in the last quarter were willing to come down on prices, there are some "who still haven’t got the memo" that the market is not as hot as it used to be, resulting in their homes languishing on the market, according to Jonathan Miller, the chief executive of Miller Samuel and author of the report.
Though best known for VIP residents like Calvin Klein and Martha Stewart, the exclusive seaside resort on the east end of Long Island has long been a favorite vacation spot of Wall Streeters, linking the health of its real estate sector to the performance of the financial markets.
Sales between 2013 and 2015 were particularly strong in the Hamptons, as would-be buyers finally regained enough confidence after the global financial crisis to take the plunge and snap up trophy homes.
However, Hamptons real estate started to cool last year, amid saturated demand and market jitters over the U.K.’s unexpected decision to leave the European Union, a slowing economy in China and the U.S. election.
While the Dow crashed through the significant 20,000 barrier Wednesday, Mr. Miller doesn’t think it will make much difference when it comes to demand for Hamptons homes.
"The strength of the Hamptons market is more aligned to employment and compensation. Employment is down and compensation is up in the air so I’m not sure its makes much difference," he told Mansion Global.
Across the whole of the market there were 524 sales, down from 613 a year earlier. The median sales price dropped to $925,000, from $997,000
This chimed with a separate report by brokerage Corcoran, released Thursday, which found fewer closings reported in every area on the South Fork in the fourth quarter of 2016 compared to a year ago, resulting in a 24% drop in number of sales.
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"Sales dipped on the South Fork, as some potential buyers held off pending uncertain economic conditions and the election," according to the Corcoran report.