April 19, 2006
House Prices: High But Not Climbing
Real estate prices on the East End have been defying the laws of gravity for the better part of a decade: what went up hasn't come down. But according to data released by Suffolk Research Service, which tracks the real estate market on the East End, 2006 may buck the trend of double-digit increases that characterized the past four years.
In the first two months of this year, the median price for a single family home decreased by 5% in Southampton, to $700,000, and by 2.35% in East Hampton, to $829,000. Prices in Riverhead, up 11.74% to $415,000, and Southold, up 15.3% to $565,000, continued to rise, while Shelter Island saw a 2.33% gain, to a median price of $767,500.
The declines on the South Fork, though small, stand in contrast to the rapid price gains that characterized much of the past six years. Between 1999 and 2005, the median price of a single family home grew by more than 100% in each of five towns on the East End, 178% in Southampton and 195% in East Hampton, the two largest towns. Prices increased by 132% in Riverhead, 165% in Southold, 200% in Shelter Island, according to numbers provided by SRS.
"Every so often there is a softening of the market. It's happening on the national level and maybe it's happening here," said George Simpson, the president of SRS and a resident of Southampton. There was a similar slowdown in 2001, when home prices grew at a more sedate rate of about five percent.
"At one point anything that came on the market sold right away and there was an expectation that prices would go up 30% every year," said Jane Winningham, a real estate agent with the Hampton Realty Group in Amagansett. "I think that people got caught up in the frenzy."
"The things that are priced as if it were the good old days — as in the last year — are not going to fly off the shelves," added Stuart Epstein, the owner of Devlin McNiff Real Estate in East Hampton.
Winningham said sellers with reasonable expectations about the market will do just fine. "I think that things that are priced right are still selling," she said.
In March the Census Bureau reported that the national median price of a new home, a much-watched indicator of the health of the housing market, was $230,400 in February, down 10% from January and down three percent from February 2005. Sales of existing homes were up from 5.2% in February as compared to January, the biggest percentage increase since February of 2004.
But while talk abounds of the real estate slump on the national level, especially in the West, where new home sales fell 30% between January and February, the East End occupies a unique position in the real estate market. The area, with a high proportion of second-home buyers and limited housing availability, "to a great extent is insulated" against national fluctuations, Simpson said.
And those looking to snap up a great bargain will likely be disappointed. "We're not seeing any drastic reduction in prices," said Barbara Deacon, a real estate agent with the Southold office of Century 21-Agawam Albertson. "It's not a crazy buyer's market."
Jerry Allen, the owner of Siegmund Real Estate, which is based in Hampton Bays and Quogue, said he believed that higher interest rates for mortgages had affected the lower-end of the market, which he defined as under $700,000. "The higher you go, the less problem there is," Allen said.
On the rental end of the equation, while no official numbers are available, signs point to a busy summer season. "The summer rental market has been very good, much better than the past two years," Allen said, a sentiment echoed by the other real estate agents.
Predicting the long-term real estate market is an inexact science at best, but those interviewed saw a distinctly rose-colored tint to the picture. "It's a phenomenal place and there's not much of it, and chances are it will take off again," Simpson said.
"On the 10 year horizon I would be extremely bullish," Epstein added. "I would put every penny I had into the market."