2008Apr Hampton's Housing Slump
2008Apr Hampton's Housing Slump
In a sign that falling prices and home sales gluts are no longer limited to the nation's declining rust-belt cities or bubble markets, prices for gilt-edged properties in East Hampton and Southampton have fallen sharply…. The three-month running median sales price of single-family homes in the two towns fell 19.2 per cent to $638,600 (€400,000, £320,000) between December and February, according to Suffolk Research.
That is almost as much as the 19.3 per cent drop in home prices that Miami and Las Vegas, where the boom and bust in the housing markets has been most dramatic, suffered in the whole of last year, according to the S&P Case-Shiller house price indices.
Holiday homes have been among the hardest hit. Last year, sales of vacation property fell 31 per cent across the US, against a 10 per cent drop in sales of homes bought to live in, according to the National Association of Realtors.
It’s appropriate that a housing bust largely caused by over-zealous financial engineering on Wall Street would ravage the Hamptons, the summer playground of the Wall Street jet set. It’s equally interesting that the biggest weakness nationwide has been in vacation homes. This is a sector that is highly favored by demographic trends, but unfortunately, it was also the epicenter of the speculative frenzy that led to inflated prices and massive oversupply. This mess will likely get worse before it gets better. But at some point, prices will bottom-out, inventories will be worked-off, and the strong demographic trends will be able to reassert themselves. A credit crunch and recession will cause further price weakness, but the desirability of a beach-front retirement hasn’t changed.
