The Hamptons have been booming since the early days of the Covid-19 pandemic, as wealthy buyers fled New York for spacious private homes on the eastern tip of Long Island. Usually a popular place to spend the summer, the beachfront enclave has become a year-round destination, and demand for Hamptons real estate shows no signs of slowing down.
Last year, the top 10 deals in the Hamptons accounted for $607 million in sales, 35% more than in 2020. The median sale price of luxury homes – defined as the top 10% of sales – in the fourth quarter of 2021 was $10.73 million. , up 21.7% year-on-year.
At the same time, transactions are down: in the third quarter of 2021, 397 homes were sold, down 35% year-on-year. After nearly two years of a buying frenzy, inventory has run so low and competition so fierce that buyers are struggling to close deals.
Following: In markets where inventory is chronically low, can new construction move the needle?
“Inventory is low. At this point, it will probably be more difficult this year than in previous years,” said Erica Grossman, broker at Douglas Elliman in Southampton. “From Southampton to East Hampton, that seems to be the case everywhere. ”
One factor that’s on the buyer’s side: interest rates are still low, which bodes well for good returns on investment even as home prices in the Hamptons continue to rise.
“The time to buy is when interest rates are low. It’s not about knowing when prices are high,” said Ashley Farrell, broker at Corcoran in Westhampton Beach. “It will cost more to own the same house a year from now if prices go down and interest rates go up.”
And there are pockets of the Hamptons that haven’t seen the same level of rapid price appreciation as others, local agents say. These neighborhoods won’t stay under the radar for long, so those looking to invest in the area this year could find upside potential there if they act quickly.
Following: Dubai property investors should consider apartments over villas this year
“Remsenburg used to be a community where it was very difficult to sell because buyers said the properties were too big and there was nowhere to go,” said Enzo Morabito, a Douglas Elliman broker who works mainly in Sag Harbor and Westhampton. Beach. “Now they like that there aren’t many people around.”
Still, potential buyers of any Hamptons home must be prepared to act quickly and start their search quickly, if they are to have a property in time for summer.
“If something is listed on Thursday, be prepared to go out this weekend or bring a friend over and watch it for you,” said Rebekah Baker of Sotheby’s International Realty’s East Hampton Brokerage. “You have to be ready because we have a real lack of inventory and there are a lot of buyers out there.”
Following: After years of steady price increases, a window opens for buyers in Hong Kong
Where to Look for Upgrading Potential in the Hamptons Now
There are neighborhoods where demand is a little less heated, and in 2022 buyers may want to consider these locations.
“Westhampton has been kind of a sleeper, not as in demand as other neighborhoods,” Ms Farrell said. “But now that a lot of people have a hybrid work schedule, it’s becoming very popular. It’s the closest Hamptons neighborhood to town, and there’s been a huge revitalization of its main street and downtown area recently.
And in Westhampton, the quiet hamlet of Remsenburg is “the Hamptons’ best-kept secret”, Ms Farrell said, with plenty of room for price growth.
Quieter areas like Springs in East Hampton also flew under the radar until very recently.
“I think Springs is still going to see a lot of appreciation,” Ms. Baker said. “It’s surrounded by the bay and has a less manicured look and a wilder landscape. You can find a lower price there.
Following: Buyers expected to act quickly in London with price increases on the horizon
Other neighborhoods to consider when looking for price growth in the coming years are those on the outskirts of the region. Mr Morabito named the town of East Moriches, west of Westhampton, as one such town.
“It’s a nice little place, a quiet village by the water,” he says. “These types of communities are going to grow in popularity. Always go to the margins, look a little further.
Investors looking to avoid some of the most intense competition should also consider properties that need a bit of work. Turnkey homes are particularly sought after by buyers looking to get away from the city and hoping to avoid the hassle of renovation.
“If you’re willing to work, you’ll have less competition,” Ms. Farrell said. “A lot of buyers want to avoid trying to find labor and materials to renovate. If you take that risk, there will be less competition because most people don’t want to face it.
Buyers with the appetite and vision to take on a repairman renovation of the Hamptons could see substantial returns on their investment in the years to come, Ms. Baker said.
“Properties that are real fix-ups often sell for less than if they had been demolished,” she said. “People tend to view this work as time, and time is money. A buyer who pitches in to remodel a home can save a lot of money and potentially make a good profit.
Strategies for Buyers
Wherever buyers search in the Hamptons, they are likely to encounter limited options and stiff competition due to tight inventory.
Some new developments are coming to market, but even that is happening quickly.
“We have considered the construction of 10 new houses, and eight of them are under contract although they are not yet finished,” Mr Morabito said.
Following: Deals on South Florida homes can slip like sand, but not if you know where to look
More inventory will come from developers, while sellers are “holding their breath,” he said, and $3 million to $4 million homes are in particular demand.
In such a competitive climate, those able to pay cash have an advantage, but buyers using financing can gain an advantage by demonstrating their preparedness.
“A lot of people can’t pay cash or forego the possibility of a mortgage, so to level the playing field I recommend they get a pre-commitment letter from the bank,” Ms Farrell said.
Following: Megamansions should look like houses, not museums
The market is changing so quickly that being ready to act is key to finding the right property. Some buyers, Ms. Farrell said, buy Hamptons properties without seeing them in person, making their decisions based on video and photography.
This means those looking to invest this year should work with a seasoned agent who knows the area and be prepared to view a property in person immediately.
“I always recommend that a buyer try to be reasonable and not get carried away with the emotion of a bidding war,” Ms. Baker said. “If you have your financing in place, have already chosen a local lawyer and are ready to step in and make an offer, you will have a better chance.”
Click for a more in-depth analysis of luxury lifestyle news