I would expect the signal to be more expensive - the signal itself and the utility work I guess, but 400K does seem like a lot.
I thought that too at first, but the explanation was, I think, that they would have to add turn lanes to the intersection with a red/yellow/green light because traffic would be moving through the intersection faster on the green light than it is doing now with the three-way stop.
I've decided the solution for me is to just avoid going to Seagrove/Seaside altogether. I plan to sell my place there so I won't be bothered with it. Hopefully, I can get at least what I paid for it. After more than 20 years I'm ready to move on.