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Most Expensive Small City – Sagaponack, N.Y. Photo: Getty Images

Want to buy Billy Joel’s Sagaponack home? Last month the piano man dropped the price on his oceanfront house on Long Island’s East End again, this time from $19.9 million to $18.5 million. It started out at $22.5 million when he first listed the property in 2009.

And Joel is not alone. Across the U.S., prices last year continued to decline even in the richest neighborhoods. Sagaponack, a village with a population of only 582 (it swells during the summer), saw home values drop 14.5 percent from 2009 to 2010-yet it once again earned the No. 1 position on Businessweek.com’s ranking of the Most Expensive Small Towns in the U.S. It held on to the top spot because, despite the dip, median home values were $3,406,640, the highest in the nation, according to real estate website Zillow.com.

Working with the website, Businessweek.com identified the 50 most expensive small towns (populations less than 10,000) nationwide where median home values are the highest. We evaluated data on 4,624 cities and census-designated places from November 2010, the most recent available. Some expensive communities, such as Bel Air, Calif., were not included as they are neighborhoods rather than cities or census-designated places. Of the 50 most expensive places-many of which are second-home markets-nearly half are in Long Island’s Nassau and Suffolk counties and about one-quarter are in California. None of the towns in the ranking had a median home value of less than $1 million.

Biggest Price Declines

Values dropped in 33 of the 50 most expensive small towns. The biggest decline, 15.7 percent, came in Woodside, Calif., home to such tech billionaires as Oracle’s (ORCL) Larry Ellison and Apple’s (AAPL) Steve Jobs. Values in the second-most expensive town, Jupiter Island, Fla., were down 11.3 percent from a year ago, to just over $2.8 million, and in No. 4, Los Altos Hills, Calif., they were down 13.6 percent, to a bit more than $2.1 million.

In eight of these towns (five of which are among the top 10 most expensive), values were more than 10 percent below levels of a year ago. Nationwide, home values were down 5.1 percent, Zillow.com’s data indicate.

Only 17 places experienced increases in home values. The winner was Kings Point, N.Y., a wealthy suburb of New York City on Long Island’s Gold Coast, where prices rose 13.5 percent.

In the Hamptons, “prices have not yet rebounded,” says Michael Schultz, vice-president in Corcoran’s East Hampton office. With prices down, he expects activity to pick up in the first quarter this year.

Fewer High-End Sales

Home to wealthy Wall Streeters, corporate executives, and celebrities, the Hamptons saw both unit sales and prices down year-on-year after rising in early 2010. The third-quarter drop in the median sale price in the Hamptons-North Fork market was due to a shift away from high-end sales-only 11 homes sold at or above $5 million in the third quarter, down from 20 sales a year earlier, according to a report by Miller Samuel, a New York real estate appraisal services firm.

“Across the board, everyone brought their homes down 15 percent to 20 percent. Sellers are becoming more realistic” and buyers are more conservative, says Harald Grant, senior vice-president in Sotheby’s International Realty’s Southampton office.

After a strong first half in 2010, unit sales in Sagaponack and nearby Bridgehampton were down 18 percent year-on-year in third quarter, and the median sale price was down 53 percent, according to a report from real estate brokerage Corcoran. Despite this short-term softness, “Sagaponack is a strong market because it has cachet,” Grant says.

A Premium to Rub Elbows

What makes small towns such as Sagaponack attractive is their proximity not just to natural beauty and first-class golf courses but also to other wealthy people. That’s why the most expensive small towns often cluster around major financial centers. A survey of U.S. metropolitan statistical areas by consultancy Capgemini shows that New York City had 667,200 high-net-worth individuals, or people with investable assets of $1 million or more, in 2009-far more than any other metro in the country. Other wealthy areas include the Los Angeles metro area (235,800), Chicago (198,100), Washington, D.C. (152,400), and San Francisco (138,300).

Of the 50 most expensive small towns, 22 are in New York-namely, Long Island-and 13 are in California. Others were in Colorado, Florida, Massachusetts, Maryland, New Jersey, Washington. Making the ranking for the first time was even one town in Tennessee. Belle Meade (a very rich town in Tennessee).

Some well-known markets are less active. “Our really high-end market is almost frozen,” and buyers do not seem to want to buy above the $6 million level, says Paul Grover, a partner in Robert Paul Properties, a Cape Cod brokerage. With Wall Street turning around, he anticipates that demand will pick up, “but we’ll see it in New York first.”

That note of hope is one that many real estate brokers and home sellers across the U.S. share. In expensive small towns like Sagaponack, however, even the battered prices might strike many Americans as wealth beyond the dreams of avarice. It’s hard for someone who lives in a house valued in the mid-six figures-or less-to empathize with sellers asking prices in the seven- or even eight-figure range. But no owner likes to take a haircut when selling his home. Just ask Billy Joel.

Here’s America’s Five Most Expensive Small Towns

Water Mill, N.Y. Photo: Getty Images

No. 5: Water Mill, N.Y.
Median Home Value: $2,111,688
Price change ’09-’10: -10%
Population: 2,137
2010 Rank: 6
Water Mill, about 90 miles from Manhattan, offers riding stables, golf courses, and some of the finest sailing and fishing waters in the Northeast. The town has been home to actor Richard Gere, fashion designer Adrienne Vittadini, publishing heiress Anne Hearst, and real estate investor Andrew Borrok.

Los Altos Hills, Calif. Photo: Getty Images

No. 4: Los Altos Hills, Calif.
Median Home Value: $2,161,255
Price change ’09-’10: -13.6%
Population: 7,981
2010 Rank: 4
The elite town of Los Altos Hills, a wealthy Silicon Valley community 35 miles south of San Francisco and 17 miles north of downtown San Jose, encompasses 8.4 square miles. It has 65 miles of trails and off-road paths for walking, running, bicycling, or even horseback riding. Residents have included Google co-founder Sergey Brin, Yahoo! co-founder Jerry Yang, Hewlett-Packard co-founder David Packard, and venture capitalist Kelly Porter. Median household income is $218,922, estimates the U.S. Census Bureau.

Kings Point, N.Y. Photo: Getty Images

No. 3: Kings Point, N.Y.
Median Home Value: $2,379,905
Price change ’09-’10: +13.5%
Population: 5,132
2010 Rank: NA
This Long Island village, home of the U.S. Merchant Marine Academy, is reputed to be the inspiration for West Egg in F. Scott Fitzgerald’s The Great Gatsby (Kings Point even has a road named Gatsby Lane). The area has two main parks: Steppingstone Park, which offers mooring for more than 300 boats, and the 175-acre Kings Point Park. Kings Point was home to Chrysler founder Walter Chrysler, retailer Henri Bendel, and comedian Alan King, according to longislandexchange.com.

Jupiter Island, Fla. Photo: Getty Images

No. 2: Jupiter Island, Fla.
Median Home Value: $2,810,434
Price change ’09-’10: -11.3%
Population: 875
2010 Rank: 2
The town of Jupiter Island, which developers in the 1920s originally envisioned building into a Hollywood-like center for production companies and movie stars, is well-known as one of the wealthiest places in the country. The U.S. Census Bureau estimates per capita income to be $235,758. It has a permanent population of 584, with a seasonal population of approximately 1,775, according to the town website. Jupiter Island has been a second home for many old wealthy American families such as the Doubledays, Fords, Heinzes, and Mellons, and residents have included golfers Greg Norman, Nick Price, and Tiger Woods, President George H.W. Bush, actor Burt Reynolds, and baseball star Mike Schmidt, according to Corcoran.

Sagaponack, N.Y. Photo: Getty Images

No. 1: Sagaponack, N.Y.
Median Home Value: $3,406,640
Price change ’09-’10: -14.5%
Population: 582
2010 Rank: 1
Southampton’s ritzy village of Sagaponack maintains its rank as the country’s most expensive small town in 2011. The village, which covers eight square miles, has been home to musician Billy Joel, Apollo Management Chief Operating Officer Henry Silverman, and former Kinray Chief Executive Officer Stewart Rahr. It is also the site of Fair Field, the 63-acre oceanfront estate of Renco Group Chief Executive Officer Ira Rennert, who owned military Humvee maker AM General. At 6,000 square feet and with a 164-seat theater, three swimming pools, and a two-lane bowling alley, Fair Field is one of the largest private houses in the country.

Click here to read the entire list of America’s 50 Most Expensive Small Towns 2011

The long-predicted double-dip in housing has begun, with cities across the country falling to their lowest point in many years, data released Tuesday showed.

Prices in 20 major metropolitan areas fell 1 percent in November from October, according to the Standard & Poor’s Case-Shiller Home Price Index. The index is only 3.3 percent above the low it reached in April 2009 and has fallen fell 1.6 percent from a year ago.

“A double-dip could be confirmed before spring,” the chairman of S.&P.’s index committee, David M. Blitzer, said.

Eight of the 20 cities in the index fell to new lows for this cycle, including Atlanta; Charlotte, N.C.; Portland, Ore.; Miami, Seattle; and Tampa, Fla. Only a handful of places — essentially California and Washington — saw prices rise.

Analysts said the declines would continue even if they would be nowhere near as intense as in 2007 and 2008.

“The enormous supply overhang of existing homes (particularly factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time,” Joshua Shapiro, the chief United States economist of MFR Inc., said.

The housing market, which usually leads the economy out of a recession, is holding it back this time. New home sales are in the doldrums and mortgages are hard to come by. Government programs have stanched the bleeding but do not provide permanent relief.

In some cities, the decline over the last year was quite sharp.

Prices in Atlanta and Chicago fell more than 7 percent, exceeding even the drops in the perennially troubled Detroit and Las Vegas.

The Case-Shiller Index is a three-month average of prices. One hopeful sign is that on both a seasonally adjusted and an unadjusted basis, the declines measured in November were less than in October.

The 20 cities fell 0.5 percent on seasonally adjusted basis in November after a 1 percent drop in October.

WASHINGTON, Jan. 18, 2011 — /PRNewswire/ — Thanks to strengthening in consumer spending and growing policy clarity at the end of 2010, the economy is finally poised to accelerate and sustain above-par, less volatile growth, according to the January 2011 Economic Outlook released today by Fannie Mae’s (OTC Bulletin Board: FNMA) Economics & Mortgage Market Analysis Group. The economy is expected to grow by 3.6 percent in 2011, compared to an estimated 2.8 percent in 2010. The group expects some increase in housing activity during 2011, however, a growth-oriented view of housing is not expected until 2012.

“The economy has regained momentum entering 2011 and we see significant improvement in the economy’s ability to grow compared to 2010,” said Fannie Mae Chief Economist Doug Duncan. “We expect a small rise in home sales this year, but significant amounts of supply and shadow inventory of expected foreclosures will continue to hamper a robust housing picture for some time.”

For an audio synopsis of the January 2011 Economic Outlook, listen to the podcast on the Economics & Mortgage Market Analysis site at www.fanniemae.com. Visit the site to read the full January 2011 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economics & Mortgage Market Analysis (EMMA) group included in these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the EMMA group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the EMMA group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America’s

WASHINGTON (AP) — President Barack Obama, in another move to smooth frayed ties with corporate America, ordered a far-reaching review of federal regulations Tuesday with the goal of weeding out rules that hurt job growth and creation. Republicans and business groups welcomed the step but suggested he do even more.

Business groups have bitterly complained that new regulations carrying out health care and financial overhaul, among others, are holding back hiring and economic growth.

Despite Obama’s directive, there was no indication that the White House will pull back from the biggest regulatory fights ahead: the Environmental Protection Agency’s plans to regulate greenhouse gases and rules carrying out Obama’s health care overhaul.

Obama said his executive order would “strike the right balance” between economic growth and regulations protecting the environment and public health and safety. Agencies have 120 days to submit a plan for how they intend to review existing regulations.

The move was the latest outreach by the president to repair relations with the business community following last November’s midterm congressional elections, in which Republicans gained control of the House and increased their numbers in the Senate. Some of Obama’s critics have accused him of overstepping his federal power via rules and regulations and of being anti-business.

The president announced the regulatory review in an opinion piece in The Wall Street Journal. Sometimes rules and regulations “have gotten out of balance, placing unreasonable burdens on business—- burdens that have stifled innovation and have had a chilling effect on growth and jobs,” Obama wrote.

“Regulations do have costs; often as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance.”

The executive order instructed federal agencies to scour their books for rules that place an unreasonable burden on businesses. Specifically, Obama said regulations must reduce uncertainty, be written in plain language, be built upon public participation, and identify the “least burdensome tools” for achieving the goals of the new government rules.

Still, the executive order, similar to one former President Bill Clinton signed in 1993, doesn’t cover independent agencies, including those that oversee the financial services industry such as the Securities and Exchange Commission and the Federal Reserve

The president said the review “will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.”

Obama issued the order on the eve of a vote by the House to repeal his landmark health care law. The repeal is expected to pass the GOP-led House but not the Senate, which is still controlled by Democrats.

White House spokesman Robert Gibbs said Tuesday’s order was not tied to GOP action on Capitol Hill, and said the proposal had been in the works for several months.

Gibbs said that, while there will be those in Washington that want to “add a political label to this or that,” the president’s decision to seek the regulatory review were “a common-sense” based rather than politically motivated.

Both Republican leaders and business groups praised the president — but in cautious tones, perhaps expressing misgivings that such a review might wind up with even tougher regulations in some instances.

Obama’s action is “a positive first step,” said Thomas J. Donohue, president of the U.S. Chamber of Commerce, the nation’s biggest business organization.

But, Donohue added, “a robust and globally competitive economy requires fundamental reform of our broken regulatory system.” He called on Congress to “reclaim some of the authority it has delegated to agencies.”

Obama plans to give a speech to the chamber, with whom he has frequently locked horns over health care and financial regulation, on Feb. 7.

The National Association of Manufacturers said it “appreciated” Obama’s call for a regulatory review, but called for Obama to demonstrate results by “delaying poorly thought-out proposals that are costing jobs,” listing the EPA’s proposals to regulate greenhouse gases as a prime example.

“Manufacturers have been saying for some time that overregulation is harming job creation and stifling economic growth,” said NAM spokesman Aric Newhouse.

House Majority Leader Eric Cantor, R-Va., said Obama’s executive order “shows that he heard the same message I did in the last election — that Americans are sick and tired of Washington’s excessive overreach and overspending.

“While I applaud his efforts . we must go further,” Kantor added. He proposed more aggressive steps to strike down “needless and burdensome” regulations that plague businesses and stifle job growth.

Rep. Darrell Issa, the California Republican who chairs the House Committee on Oversight and Government Reform, applauded Obama “for joining what must be an effort that stretches beyond ideological entrenchments to identify the regulatory impediments that have prevented real and sustained job growth in the private sector.”

Brendan Buck, spokesman for House Speaker John Boehner, called Obama’s review a welcome acknowledgment that government regulations have economic consequences. But he said the president should take bolder steps immediately.

David Walker, former U.S. comptroller general, said in an interview that it was “fully appropriate to engage in a baseline review of existing federal regulations.”

But Walker, head of a balanced-budget advocacy group called Comeback America Initiative, questioned having the agencies themselves hunt for harmful regulations. “We need to have an independent review process that has transparency,” he said.

Walker said many of today’s regulations date back to the 1950s and need to be revamped.

Obama’s executive order is partly a political gesture, said Cary Coglianese, a regulatory expert and law professor at the University of Pennsylvania.

“This is a statement to Republicans in Congress as much as it is to the American people and to the president’s own Cabinet officials,” he said.

The proposal could cause a backlash among liberals, already upset over Obama’s appointment earlier this month of Chicago power broker William Daley, a Democrat centrist who was a top official for JPMorgan Chase and a former commerce secretary in the Clinton years. Obama’s courtship of the business community has produced some grumbling from the liberal Democratic base.

Obama said federal agencies won’t shy away from addressing regulatory gaps, such as new safety rules for infant formula and procedures that stop preventable infections from spreading in hospitals.

“We are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb,” the president wrote.

Different interest groups read their own interpretation into Obama’s executive order.

Scott Slesinger, legislative director for the Natural Resources Defense Council, focused on Obama’s specific mention of the Clean Air Act , on the books since 1970, as a “common sense” measure that has worked to the benefit of society.

“The president is right,” Slesinger said. “We need a balanced approach, but not one that responds to those who would put short-term corporate profits above the public health.”

Obama was “acting in the nation’s best interests” by calling for the review, said Charles T. Drevna, president of the National Petrochemical and Refiners Association. A spokesman for the group, David Egner, said the first economy-strangling rules to go should be new regulations aimed at reducing global warming pollution.

Just last month, Drevna said plans by the EPA to reduce heat-trapping gases at oil refineries — due to be proposed this summer — were “all pain and no gain” and “exactly the opposite” of Obama’s stated priorities for job creation and economic recovery.

Associated Press writers Julie Pace, Chris Rugaber, Dina Cappiello and Alan Fram contributed to this report.