When you begin to see real estate tracking services like Curbed reporting second quarter slippage from the previous heady quarter in the Hamptons, is it time to head for the hills, double down or hunker down?

Investing in real estate in the Hamptons is a little like investing in very high P/E stocks that are not susceptible to analysis by the usual signs and portents described by Graham and Dodd in Security Analysis, the analytical bible of Wall Street. We've all seen them: The average price-earnings ratio of the Dow Jones Industrials is in the 16–17 range, and here's this stock commanding 95 or more because somebody thinks future earnings are going to be just great! The Gilded Age had Newport, where one of the desirable amenities was anchorage depth off the Rhode Island coast sufficient to accommodate the keel of an ocean-going yacht at low tide. Our age's gilded few have the Hamptons, and there is some deep-water anchorage there, too.

The Hamptons comprise a collection of about 20 towns, villages and hamlets located on the eastern end of Long Island; on the South Fork, of course, along the Atlantic. The larger towns are East Hampton, Westhampton, Southampton and Sag Harbor, adding up to some 100,000 people, maybe 130,000 in the summer.

Let's go back a couple of years and unpack the Curbed.com quarterly headlines together with the associated price and sales data:

2013

Average Sale Price

Average Q/Q

Median Sale Price

Median/ Average

Median Q/Q

Sold

Listed

Q1: Volume Up, Prices Down in First Quarter of 2013

$1,218,594

–42.8%

$740,000

60.7%

–18.4%

347

1437

Q2: Second Quarter of 2013 Most Active Spring Since 2006

$1,696,879

39.2%

$920,000

54.2%

24.3%

675

1573

Q3: Third Quarter of 2013 Sees Modest Price Gains, Volume Increase

$1,470,565

–13.3%

$768,000

52.2%

–16.5%

534

1656

Q4: Q4 2013 Shows Market Stability

$1,574,327

7.1%

$770,500

48.9%

0.3%

496

1569

2014

Q1: In Q1, A Return to Normalcy

$1,708,925

8.5%

$880,000

51.5%

14.2%

528

1696

Q2: Q2 Saw Brisk Sales, Slightly Lower Prices

$1,539,646

–9.9%

$908,500

59.0%

3.2%

700

1647

Q3: Prices Jump in 3Q of 2014

$1,765,463

14.7%

$865,000

49.0%

–4.8%

701

1712

Q4: Hamptons Housing Prices Hit Seven-Year High in 4Q of 2014

$2,062,072

16.8%

$975,000

47.3%

12.7%

734

1575

2015

Q1: Hamptons Housing Prices Continue Strong in 1Q of 2015

$1,761,028

–14.6%

$920,500

52.3%

–5.6%

541

1636

Q2: Hamptons Housing Prices Slip in 2Q of 2015

$1,577,944

–10.4%

$849,000

53.8%

–7.8%

590

1694

The first thing that jumps out of the table above is the high average price. The second is the big difference between the average and median prices. The median, remember, is the point at which half of the sales are below it and half above, so if there is a 50–60% difference between median and average, it means that the market is truly distorted by a few very, very large sales among the ordinary million dollar homes that would sell for half that in most other parts of the country. Those sales also skew the quarter to quarter percentage changes. But that's what happens when there is a truly lovely playground within reach of a major wealth engine like New York City. The usual measures of sound real estate investing are also suspended in Boston's playgrounds, Cape Cod and Newport, and San Francisco's Marin County and Napa Valley.

Wall Street has its Greater Fool theory: No matter how much you pay for something, a greater fool will come along in the future to take it off your hands at a higher price. People who invest in such places are largely immune to quarterly fluctuations because they are already rich and famous, or because they aspire to one or the other of those and want to play among their own ilk. In other words, the reasons to invest in the Hamptons transcend usual investment economics.

It is impossible to make a trend out of such erratic sales data. So, absent a truly catastrophic economic downturn, real estate investors in the Hamptons will probably be just fine if they can control the timing of their sales. In other words, hunker down. On the other hand, pity the ordinary family that has to live there because of jobs and family roots. If they already own, their taxes may be ruinous but their retirement is secure. If they want to buy, there will be few choices open to people with normal jobs and family incomes.

For related reading, see Tips for Buying Luxury Real Estate and World's Most Expensive Mansions.