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Hamptons and North Fork median home prices this year saw the biggest quarterly drops since a Manhattan-based appraiser began tracking the market five years ago.

The median sales price of $605,000 for 2009's first quarter represents a 23.4 percent dive from the $790,000 for the same period a year ago and a 12.3 percent fall from the preceding quarter's $690,000, according to a report from the Miller Samuel firm.

"It's essentially a new market," said Jonathan Miller, chief executive of the appraisal company, whose report was commissioned by Prudential Douglas Elliman Real Estate and is expected to be released today. "This is a milestone that was passed ... characterized by a lower level of activity and a lower price point than what we've been seeing over the last several years."

The big price drops in what is primarily a luxury and second-home market were driven by two related reasons.

First, the quarterly closing prices reflect contracts negotiated late last year, when big-name Wall Street firms like Bear Stearns and big businesses like automaker Chrysler were either dead or falling apart, local real estate industry veterans said. That gutted the core of the Hamptons and North Fork's buying pool: people who in good years would have bought homes with their bonuses and salaries but who now are jobless or scared into holding onto their cash.

Second, when supply goes up, prices go down. The mortgage and economic crisis prompted more people to put their second homes on the market, leading to a first-quarter inventory that's 10 percent higher than the preceding one and 23.9 percent higher than the same period a year ago, according to the report. But at the same time, first-quarter sales fell 44.6 percent from the last three months of 2008 and 50 percent from a year ago, Miller said. That's 201 properties this quarter, 363 the preceding quarter and 400 a year ago, data showed.

It's a reversal of fortunes. A year ago the region was still immune to the subprime mortgage collapse, but now it's leading Long Island in falling prices, just as the rest of the Suffolk and Nassau show signs of stability.

Paul Brennan, who oversees the Hamptons area for Prudential, was one of the first last year to publicly say the region's prices were starting to go downhill. He predicts a slightly better second quarter. There's been more activity this year, he said, "but you have people not wanting to pull the trigger."

The falling median for the tony communities might tease house hunters by putting many Hamptons and North Fork properties within reach -- if they want to live far from the center of the Island or can afford a second home.

But Miller said these prices won't get you a house next to famous people like Billy Joel. "There are opportunities," he said. "It's just not oceanfront."