If someone had told a would-be homebuyer in the Hamptons that their house would probably be worth less in 10 years, what would have happened? There would have been fewer sales. Ta-da!
Forget all that who-do voodoo about Wall Street bonus money feeding the Hamptons real estate market. There is always plenty of speculative money around. The rich don’t get poorer, they get richer.
Those fat cats who think real estate is the best place for their money fuel the market. And in this Trumpian Economy, there are many places to put bucks down on the table.
The recently released Elliman Decade Survey of Residential Sales provides the autopsy details: The average sales price in the Hamptons market ($1.68 million) is down nearly one percent for the decade, and almost 10 percent from the same quarter a year ago. These are unchartered waters. The raw number in 2010 for the average sales price, $1.42 million, also lagged.
The median price (Hamptons market) reinforces the fact: $906,000 in 2010, up to $958,000 by 2018, but down to $860,000 by decade’s end.
There are signs the malaise is lifting if your cup is half-full. The number of sales is about the same per year for the decade 2000 but down significantly for the year.
Why then, should there be cause for optimism? Looking at the data piece by piece in total may provide a clue; listing inventory is down for the decade ever so slightly (2052 in 2019), but down significantly from a year earlier (2352). This could mean the sluggish market is beginning to loosen, but then again it could mean prices are so low sellers are pulling their product off the market.
But the best indicator of improved sales (besides sales!) is average time on the market, which has shrunk from 155 to 141 over the decade. To accomplish this, though, sellers have had to accept deep discounts, 14.1 percent in 2019. This is a huge discrepancy that, at best, indicates wishful thinking and, at worst, delusional behavior worthy of a stay at a facility with tall walls.
Year-round rentals demand top dollar in the Hamptons. Sales prices are reaching the point that buying and then renting yields an excellent return on investment, especially when the rent will cover the mortgage. And though word is summer rentals have taken a hit, the smart money says it’s being diverted away from traditional real estate agencies to AirBnbs. Stay tuned.
By the way, the North Fork has proven to be all the things the Hamptons have not over the past decade. The median price is up from $450,000 to $632,000 over the decade; sales are up 30 percent; listing discount is down from 10.3 to 8.2 percent, and listing inventory has been halved to 350 units. Clearly, this is a healthy market that should see a measured growth in sales and higher price points should the trends continue.