The Hamptons property market is in a hot spot and showing no signs of slowing.
From $ 1 million cabins (actual) to multi-million dollar megamansions, "We saw a massive year-over-year increase in the first quarter of 2021," said Jonathan Miller, president and chief executive officer of Valuer Miller Samuel Inc., which produces a quarterly report for Douglas Elliman. Total available inventory is down nearly 41% year over year, according to the report. "All segments of the market are strong," says Miller.
As with other vacation destinations and affluent suburbs like Palm Beach, Florida, and Greenwich, Connecticut, much of last year's revenue premium can be attributed to wealthy people who were desperate to get out of New York and other urban areas during Covid.
But unlike the neighborhoods where supply in the luxury sector (defined as the top 10% of the market) has plummeted, the Hamptons market is still throwing up more high-end deals to meet demand.
"Hamptons, which lists inventory in the luxury sector, is up 49.9% year over year," says Miller, "while total inventory for the luxury market in Greenwich is down 36.8%."
And that's a modest drop compared to Palm Beach, where inventory for single-family homes fell a staggering 79.7% year over year in the first quarter. According to a report by Douglas Elliman, the luxury inventory, which makes up the top 10% of the market, is down 59.4%.
Top Hamptons brokers differ on the source of this seemingly limitless luxury real estate supply, which starts at $ 3.85 million.
Some attribute this in part to older homeowners looking to make money in a bull market.
"It's a generation change," says Michaela Keszler, agent at Douglas Elliman. "They have had their houses for a long time and want to downsize or move elsewhere."
Others say a significant amount of the material comes from developers who launched special homes even before the pandemic began, which are only now coming onto the market. At the beginning of 2020, even before the pandemic, developers said, "We are out of inventory, let's get building permits," says Compass' Lori Schiaffino. "We're (now) seeing more inventory and a lot more renovation."
Existing buyers are also trading "where people decided they needed bigger homes and more space now," says Deborah Srb, a broker at Sotheby's International Realty. "Now they include an extended family and just have a different perspective on what makes a home comfortable."
Everyone agrees that inventory may hit the market, but quality homes, especially those priced between $ 3 million and $ 10 million, are still extremely scarce.
"I can tell you personally that nothing over $ 4 million is good," says Christopher Covert, broker at Compass. "We just can't find the inventory. If you know anyone who'll bring it, let me know. I only have two listings and this time of year I'm usually 12-15."
Developers are a factor in the Hamptons real estate market, but rising land costs, rising material costs, and increased competition for available parcels mean so much new construction came on the market in the last quarter, but not enough.
“I think the developers ran out of material,” says Keszler. "There isn't that much land or demolition to buy, and the prices are difficult for them because of course prices have gone up."
The fact that many buyers last year wanted a home they could move into right away makes it even more difficult. "I see a shortage of newer designs at all prices," says Frank Bodenchak, a broker for Sotheby's International Realty.
Instead, a large part of the volume comes from people who saw the red-hot market and "said," If we're ever going to sell, now would be the right time, "says Schiaffino.
Much of these properties "are at the end of their life because they haven't been renovated," she continues. "These families say, 'You know, I can sell this, and now is as good a time as any to get a healthy price for my family's home. "
A good portion of the people who made this decision "decided to go down in size," says Srb. “The reality was that they wanted something smaller and more manageable. These are empty nests that may have grown up children buying their own (vacation) houses. "
Some brokers have made an effort to actively court this demographic to add inventory to the market.
"We ask and urge people to put houses on the market," says Mala Sander, a real estate agent at Corcoran. “And there are a lot of people who say, 'Hey, I hear the real estate market is super hot, I have your letter or mailer or whatever and I want to talk to you about putting my house on the market. "She's moving on." There are people who would retire in a few years and say, "Now let me take advantage of this."
In the meantime, potential buyers need to be willing to spend some serious money on some serious property. "Anything under $ 7.5 million is gone immediately," says Bodenchak. "The $ 10 million market is only just getting more active," says Keszler, "but it really is asking for up to $ 10 million," that is the sweet spot, she continues.
Realtors say homes that are overpriced will still languish in the market, but those whose price is constant to sell ignite bidding wars.
"I'm telling you it's brutal," says Keszler. “You decide you like the house and you see your family there and you accepted your offer and then someone comes in with more money. It's a tense time and no deal will be made until it is signed. "
In general, "If a new home comes on the market and the price seems very good, it won't take more than a week," says Srb. "I've been doing this for 28 years and I'm amazed at the breadth (of demand) from young to old. It's almost like they're discovering the Hamptons for the first time."
Covert speculates that most of the inventory traditionally for sale has been occupied by tenants or homeowners with nowhere else to go. "I think that from August houses that have been occupied by tenants or owners since March 2020 will come on the market," he concludes. "There has to be something."