The days of making easy money in Hamptons real estate are — spoiler alert — over for now. Sellers, especially, have to be very smart and flexible about pricing. If you don’t need to sell — don’t. If you do, listen to your agent. He or she is your partner in getting your property sold and knows the state of the market better than you do.
But nil desperandum. “The selling season is underway,” said Judi Desiderio, CEO of Town & Country. “Many savvy buyers are moving their resources into real estate.” Let’s take a closer look at the third quarter results from the four agencies that report. Each report tends to focus on slightly different parts of the market, so results tend to be different from one another.
Elliman’s report begins, “Sellers’ willingness to negotiate expanded.” Not a good sign. Prices are up a little, but properties are just sitting there — sales are down and inventory is up a staggering 76.9 percent year-over-year.
Median sales price in the third quarter of 2019 was up 5.5 percent (compared to the same quarter in 2018) at $857,000, while the average price dipped 0.6 percent to $1.375 million. Notably, though, the average sales price plummeted 20.3 percent from second quarter of 2019 to third quarter 2019. Year-over-year, the number of sales dipped 15.2 percent to 402. (This is now the seventh straight quarter in which number of sales declined year-over-year.)
The listing inventory, as mentioned, is way up to 2571, from 1453 in third quarter 2018. As for the luxury market (the highest 10 percent of sales), the news is dismal. The quarter registered the fewest number of sales at or above $5 million in 6.5 years and the listing discount was at a scary 16.8 percent. Both the average ($5.216 million, down 2.5 percent) and median ($3.5 million, down 11.1 percent) prices slumped, and the number of sales dropped 14.6 percent.
What’s the problem? According to Jonathan Miller, president of Miller-Samuel Inc, which compiles the stats for Elliman, it’s all about a little too much SALT in the mix. Specifically, the revamped federal tax code capping the deductibility of state and local property taxes, known as SALT. “The impact of the federal SALT tax on East End real estate has added a layer of uncertainty to an already weakening market,” said Miller.
“SALT targets high cost housing markets — the East End is a high-end second-home market — by reducing affordability. But SALT is impacting Manhattan as well, as evidenced by cooling sales there, and Manhattan happens to be a significant source of market demand for the East End. The primary impact to the Hamptons market has been seen in the number of sales falling to the lowest third quarter total in eight years,” he added.
All is not lost, as Miller noted, “The sharp decline in mortgage rates over the past year has mitigated some of the slowdown caused by SALT.”
Town & Country
“Hamptons real estate in the third quarter of 2019 was like a carnival game with ping pong balls landing and leaping in every direction,” said Desiderio. “The good news is the numbers prove it’s not really as bad as the media made it out to be.” Oh, we’ll be the judge of that.
Compared to the same quarter in 2018, the number of sales was down 14 percent and the total home sales volume (sum of all sales) was down 19.39 percent (ouch), while the median price dropped 1.79 percent to $1.031 million.
Town & Country breaks up sales into eight ranges, from under $500,000 to over $20 million. Seven of the ranges were down, while the $20 million plus range recorded one sale, up from zero in third quarter 2018, which is statistically insignificant. The middling $5 to $9.99 million price range plummeted 60 percent.
Standout markets in this report include Montauk. “Montauk may have had three fewer sales year over year,” said Desiderio, “but the 45-percent increase in total home sales volume and 77-percent explosion in median home sales price set high water marks for the 12 individual markets monitored by Town & Country for the quarter. Amagansett didn’t come close to its 2018 record of $5.25 million for third quarter median home sales price.”
Corcoran’s report stated that closed sales for the quarter dropped 27 percent year-over-year, the largest decrease in nearly 10 years. It was the fourth consecutive quarter with a year-over-year decline in sales. But all is not lost: the report also notes that prices, on the other hand, held steady with the median price unchanged versus third quarter 2018 and average price up slightly.
Specifically, the number of sales dipped to 430 transactions. Volume was down 25 percent to $801 million. Average price ($1.84 million) was up two percent, while median price ($995,000) was flat.
As for specific hamlets, Shelter Island and Westhampton/Remsenburg reported the same number of closings reported this quarter as this time last year, while Montauk and Quogue were off by one each.
Brown Harris Stevens
BHS’s report begins, “Recovering from more significant declines in the first two quarters of 2019, the Hamptons experienced a more modest drop in sales in the third quarter as compared to the same period in 2018.” What that means: numbers dropped across the board, just less than earlier this year.
Year over year, the total number of third quarter 2019 South Fork sales declined 2.6 percent (296 versus 304), and the total dollar volume dipped 10.3 percent to $483 million. (Remember, each report includes different aspects of the market and different areas, resulting in the number discrepancies.) Average sales price in the Hamptons slipped 7.9 percent to $1.632 million, while the median price declined 6.8 percent to $1 million.
As for the market segments, the over-$5 million category saw 10 sales total, down from 18 in the third quarter of 2018. Four of those sales were over $10 million (compared to five in the previous year). The price category with the largest number of sales was the $500,000 to $1 million range, with 118 sales.
So, what does any of this mean? If you want to buy on the East End, now is a fabulous time. Prices are down and sellers are dispirited, so deals can be made. If you want to sell, make sure your pricing is realistic. Trust your agent: you’re paying him or her to help you make a deal. And as the Elliman report advises, be willing to negotiate. Good luck and let us know how you’re doing.