Dan's Papers - October 30, 2009

The East End real estate numbers for the third quarter are in. They show that the light at the end of the tunnel is not an approaching train, but recovery through activity. No longer are the sales figures falling like a one-pound sinker on the end of a fishing line; they are actually holding steady, if not building the market.

Let's look at the overall figures presented by Town & Country, Prudential Douglas Elliman and Corcoran. The number of homes sold in all the Hamptons for the third quarter of 2009 was 251, versus 257 in 2008-a modest drop of only 2.33%. Although the total sales volume was down from about $452 million (3Q 2008) to $441 million (3Q 2009) the drop is only 2.51%, and the good news is the median home sale price actually increased 4.65%, from$860,000 (3Q 2008) to $900,000 (3Q 2009).

Overall activity price ranges show why signs of recovery are evident. In home sales under $500K, the volume of sales dropped 21.74% to 54 homes in 3Q 2009 from 69 homes in 3Q 2008. The decrease in low-end activity was offset by 18 sales over $5 million in the 3Q of 2009 versus none in the 3Q of 2008. There was also an eyebrow-raising 40% increase in the sale of homes priced between $3.5 million and $5 million (14 homes 3Q 2009 versus 10 homes 3Q 2008).

The upward trend continues in the $2 to $3.49 million home sales range, with a comparative quarter increase of a whopping 45.45%, with 32 homes sold in 3Q 2009 versus 22 in 3Q 2008. And in the activity zone of $500K to $1.99 million, 133 homes were sold in 3Q of 2009 versus 138 homes in 3Q 2008. What jumps out is the statistic that sales of homes between $1 million and $1.99 million were down 22.22% (42 homes 3Q 2009 versus 54 homes 3Q 2008), whereas sales volume increased in the $500k to $999K level by 8.33%-with 91 in the 3Q of 2009, up from 84 in the 3Q of 2008.

So what does this all mean? Judi Desiderio founder of Town and Country states, "In fact, we were the first to identify the Second Quarter 2009 as 'the bottom'-and we were correct."

Dottie Herman, CEO of Prudential Douglas Elliman stated it differently in an Elliman Third Quarter report, saying, "Prices stabilized during the summer as sales surged with buyers taking advantage of improved affordability."

At Corcoran the sentiments were the same, as reflected by this statement in their report: "This increase in activity is attributable to a strengthening in the higher end market as median and average home prices have increased while the number of homes sold has decreased slightly. Inventory continued to grow in the third quarter indicating a broader range of opportunities for buyers."

Again, Desiderio's report stressed the bottom of the bottom: "In all, the homes sales activities for the 3rd Q '09 demonstrated a recovery in levels as five of the 11 markets monitored by Town & Country showed increases in the number of Home Sales, while one remained equal and five declined-a much happier report than last quarter when all 11 markets had severe declines from the previous year."

On the North Fork, the numbers and sentiments were not as rosy. Corcoran's report stated: "We continue to experience declines in average and median home prices, as the North Fork market adjusts to the current economic cycle."

Prudential Douglas Elliman's North Fork assessment states: "In a release of pent-up demand, there were 459 sales in the third quarter, 49.5% more than the second quarter and 29.3% more than the same period last year. Despite the surge in sales this summer, third quarter listing inventory expanded 5.8% to 2,419 properties compared to the prior quarter as sellers attempted to take advantage of the newly active housing market."

What all the East End figures seem to say is that homes under $500K are not selling, as perhaps those buyers haven't recovered from the economic downturn and are unable to get financing. The $500K to $1.99 million homes are being bought and sold with prices stabilizing. Homes above $2 million are beginning to move as wealthier buyers gain confidence that the downward spiral has stopped and that healthy values in the form of beautiful East End homes are available.