South Shore, Island home prices stabilize

Home prices along Nassau County's South Shore have stabilized two years after Sandy's devastating impact, although they haven't kept pace with inflation.

Long Island's overall real estate market -- not including the East End -- also held steady in the third quarter, with the median price of $380,000 unchanged from a year before, even as Hamptons home prices jumped by 12.6 percent year over year in the third quarter, to $865,000, according to reports due to be released Thursday by the appraisal firm Miller Samuel and the brokerage Douglas Elliman.

Hamptons sales activity spiked by 31 percent year over year, with foreign investors and Wall Streeters leading the charge, said Jonathan Miller, chief executive of the Manhattan-based appraisal firm.

For Long Island homes outside of the East End, it was the first time in more than a year that the quarterly reports failed to show annual price gains on Long Island. "The streak came to an end," Miller said. In part, that's because rising values inspired more homeowners to sell, Miller said; with more homes to choose from, buyers were less likely to bid up prices.

Nassau's South Shore housing market has made a partial recovery from the Oct. 29, 2012, superstorm Sandy. The median sales price in the coastal region hit $390,000 in the July through September period, up 1.3 percent from a year earlier, and was flat compared to the same period in 2012, according to Miller Samuel and Douglas Elliman.

If home prices had risen along with inflation over the past two years, that median Nassau South Shore home's value would have risen to just over $404,000, according to the federal Bureau of Labor Statistics' online inflation calculator.

To be sure, the coastal region has emerged from its post-storm crisis. In the immediate aftermath of Sandy, during the first three months of 2013, the median price fell to $355,000, Miller Samuel and Douglas Elliman reported.

However, some buyers now steer clear of waterfront homes or seek discounts due to costlier flood insurance and the risk of future storms, brokers said.

"It looked like prices were starting to rebound, but they've hit a plateau," said Jerry O'Neill, owner of Coldwell Banker Harbor Light in Amity Harbor.

In Long Beach, newly built, elevated homes come with amenities such as elevators, hot tubs, decks and two levels of living space over a street-level garage, along with cheaper flood insurance, said Joyce Coletti of Douglas Elliman in Long Beach. Those new homes can command prices $200,000 or so higher than their older, street-level ranch-style neighbors, she said.

Recent sales range from $275,000 teardowns to elevated homes selling for more than $700,000, Coletti said.

Coastal home buyers got some relief from much-feared spikes in flood insurance costs earlier this year, when a new law slowed certain reforms to the Federal Emergency Management Agency's taxpayer-subsidized National Flood Insurance Program. The program made massive payouts in the wake of Hurricane Katrina and Sandy, and it owes more than $20 billion to the U.S. Treasury.

Under a law passed in 2012, rate subsidies for many coastal homes would have expired when the homes changed hands. Now, when those homes are sold, the buyers' premiums will rise more gradually -- by up to 18 percent a year -- until they meet market rates, according to the Manhattan-based Insurance Information Institute.

"The federal government is phasing out, over a period of years, the premium rate subsidies they've given to certain NFIP policyholders," Michael Barry, a spokesman for the institute, said in a statement.

Buyers, he said, should "check to see if the seller's flood policy premiums are artificially low, because they may not stay that way for long."

By Maura McDermott

maura.mcdermott@newsday.commauramcdermott

Maura McDermott covers health care and other business news on Long Island.