The East End property boom caused by the Covid-19 pandemic is seeing a change thanks to historically low inventory, but the market continues to fuel historically high prices, competitive conditions, a near total lack of available rental properties and a faster turnover of transactions as a result.
According to an April report by the Douglas Elliman Company, sales volume is down year-over-year in all price categories for single-family homes, including the under $1 million category, which decreased by 50%. The average decline, taking into account transactions over $20 million, was around 16%.
“There is nothing to sell. There are buyers waiting on the sidelines, waiting to come to market. There are still a lot of homes to renovate, and a lot of buyers would rather not have to go occupy,” Justin said. Agnello of Elliman’s Atlantic team, which also includes James Kehoe and Hara Kang.
Jackie Lowey, a broker at Saunders, said the result is “an aggressive and competitive seller’s market. In this type of market it is essential to be prepared to bid – often above the ask – without contingencies. Working with an agent who knows the market and the inventory is really the only way to be successful in this type of market.” Contingency takes some of the risk off the buyer, who might have, for example, a mortgage contingency that makes the deal dependent on the buyer getting a mortgage.
Mr. Agnello and Ms. Lowey predicted that in about six months there will likely be a number of additional single-family homes on the market, which will benefit buyers in what is now a seller’s market. Ms Lowey said that “for the first time in a long time” – the past five to six weeks – we have “seen more inventory coming in than deals done. It’s healthy and it’s a welcome sign”.
“There is a general feeling that some of those who bought during Covid to escape the city – or bought as buy-to-let investments that have slowed down – might choose to take advantage of the strong sales market and put their homes up for sale in the next six months,” she mentioned. “Basic economics dictates that an increase in inventory will gradually redistribute the balance to buyers. I don’t think that will happen overnight, but I do think the market will stabilize.”
In 2021, she said, the Hamptons market generated $10 billion in sales, a record high even above 2020’s $8.5 billion. In contrast, Ms. Lowey said, the previous high point occurred in 2014 with $5.5 billion in sales.
Since much of the local real estate is driven by second home ownership, the current seller’s market is somewhat inflation resistant and sheltered from rising interest rates on mortgages. . “Unfortunately, those most affected by this are first-time home buyers and local working families and their children who have already been largely shut out of this market,” Ms Lowey said.
Robert Nelson, executive general manager of Brown Harris Stevens of the Hamptons, said the market here continues to be “cash-based” rather than mortgage-based.
“There are a lot of regular cash purchases – younger buyers who have taken their profits from cryptocurrency and bought real estate, and buyers who have taken advantage of Wall Street and want to withdraw money from the table there and invest it in real estate,” says Nelson.
Mr Agnello said he had not “done a mortgage transaction for a long time. If it has, it is with a private lender or a bank and it is a small amount, not the full amount” of the selling price.
Mr Nelson added that ‘locals who want to stay local’ are currently being barred from home ownership as ‘the unfortunate consequence of a premium, luxury market’.
He also urged sellers to set a fair price for their properties. “Don’t overdo it, because if you do, you won’t sell,” Nelson said. “People will see it. For buyers, I recommend being 100% ready to commit. Don’t look into a house if you’re shopping. Don’t waste your time – the houses you see today will probably be gone in two weeks.”
Revenue from the Peconic Bay Community Preservation Fund, which provides the five East End towns with money from a 2% real estate transfer tax to be used for land preservation, historic easements, improving water quality and recreational spaces are linked to the market. In a May 9 report, Assemblyman Fred W. Thiele Jr. said that in the first quarter of 2022, the CPF collected $56.1 million, which is “the strongest first quarter ever.” important part of the 24-year history of the CPF program”.
East Hampton’s revenue totaled $18.75 million from January to March of this year, up 7% from the same period in 2021. Riverhead – considered the city with the most “affordable” real estate prices — had the biggest boom of the five cities, with a 32.4% increase in preservation funds. Revenues increased from $1.82 million in 2021 to $2.41 million in 2022, indicating an overall rise in the market.
“We live in an incredibly beautiful and desirable place,” Ms Lowey said. “The pace of the market will always fluctuate, but the Hamptons will always be a solid investment. People want to be here! Came here 22 years ago and never left! We had a historic two-year bull market. in the Hamptons, which is not sustainable with these record numbers. I think we will see a gradual cooling and a return to a more traditional paced sales market with more balance between buyers and sellers.