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Manhattan has been mostly immune to the Housing slump. This has been primarily due to lots of Wall Street money, and the cheap dollar, which has made real estate in NY very attractive to Europeans.

The Hamptons are apparently less immune. It's a seasonal market, so when problems show up, they do so very quickly. It's now the beginning of the rental/purchase season, and the issues are brought into bright relief:

"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 Long Island resort towns, among the wealthiest and most well-connected in the US, experienced a boom between 1998 and 2007 when home values quadrupled...

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.

As we noted over the weekend, sales of vacation property fell 31% across the US, against a 10 per cent drop in sales of homes bought to live in.

The Hamptons are now facing a high end rental market with decreasing demand, amid a glut of properties to let. FT specifically mentioned several properties owned or rented by Bear Stearns (NYSE:BSC) executives that are back on the market. Agents said the rental market is off 10%, after several years of double digit gains.

I wonder if this might be presaging weakness in the NY housing market...

Source:
Housing slump comes to the Hamptons
Daniel Pimlott
FT, March 31 2008 19:35

See also:
New York City Real Estate Market Slows as Wall Street Cuts Jobs
Sharon L. Lynch
Bloomberg, March 31 2008

Home building tumbles for 24th month
MARTIN CRUTSINGER
AP, April 1, 2008

Source: Housing Slump Comes to the Hamptons