Sifting through the market data concerning the Hamptons real estate market has proven difficult for the third quarter of this year due to the ransomware attack on Suffolk County’s computer systems on September 8, 2022. A cybercriminal outfit from the darkweb known as “BlackCat” took credit for shutting down Suffolk County government systems — everything from 911 dispatch to title searches, tax records and criminal records. The Wall Street Journal recently reported that over 4 terabytes of data were stolen – and the disruption continues, affecting the day-to-day operations of the County. This attack also delayed the ability of the Suffolk County Board of Elections to report the voting results on November 8.
Town & Country Real Estate issued its market report for the third quarter, even though the last three weeks the quarter’s recording and transfer information could not be retrieved from Suffolk County records. The report, prepared by Town & Country CEO Judi Desiderio, shows that 11 of the 12 Hamptons and Shelter Island markets monitored by Town & Country have experienced a slowdown in the number of home sales. 30% fewer homes were traded, even though the median home sales price was stable at $1.725 million. The surprising news: total home sales volume increased by 85%, from $851.5 million to $1,548,185,890. Amagansett and Montauk were the big winners: Amagansett broke records for the median home sales price at $10.7 million and a 176% increase in sales volume to $221.2 million; median home sales price in Montauk increased 17.4% to $2.23 million.
The interesting takeaway from this report is that the total number of transactions is down – even though the market remains strong. Tim Burch of Brown Harris Steven’s East Hampton office sheds some light on this trend: “The numbers show that while it’s not as busy as it was, the market is just as strong as it was. While we are seeing fewer properties going into contract, the low inventory keeps the prices strong.”
The low inventory seems to be what’s keeping the Hamptons markets humming, despite the national concern that the real estate markets are beginning to contract due to the rapid increase in interest rates and swings in the financial markets. “There’s no indication whatsoever that the national slowdown will have an impact here,” comments Mr. Burch. “The law of supply and demand works. What we are seeing is that properties which are properly priced are still selling quickly.”
Corcoran’s Gary DePersia looks at the market through a little bit of a different lens: a continuing buyer confidence in the Hamptons. “I was surprised to see the number of buyers out there looking at Hamptons properties given the negative impacts of the economy. There is significant interest and buyers are making decisions now, which is unusual for this time of year. This goes to show you that there are buyers who still want to invest in the Hamptons – at all price levels.”
Are rising interest rates a problem? “Interest rate increases should not have the same impact on the Hamptons market as in other places,” states Tim Burch. “I tell my clients to ‘marry the house, date the rate.’ Buy the house you love, then refinance when the rates come down. Since pricing is no longer a bidding war and buyers are not overpaying for a house, the pricing differential will achieve a sort of balance between the higher interest rates and the more stable purchase price.”
Balance is the key according to Douglas Elliman’s Kyle Rosko “We have a disconnect currently. Buyers think one way, and some sellers think the market is the same as it was during the pandemic with respect to pricing. This creates a stagnant ‘wait and see’ energy – a holding period in which buyers wait to see if prices are going to change. Interest rates have never shifted so fast, and sellers have to account for this fact. This is not the time to be ambitious about pricing.” Tim Burch looks at the issue of seller-buyer balance from what he terms the ‘psychology of price drops’: “Simply put, a seller is more content when a property is put on the market for the right price.”
Mr. Rosko confirms quick movement for good, turnkey assets which are properly priced. “This is the most educated buyer pool we have ever had. Many have had years to study the market, sitting out the pandemic and waiting for the right property to come onto the market. And when they see it, they pounce.” But Rosko also confirms that the madness and frenzy of the pandemic years has abated. “The pace has changed,” he comments. “Buyers are taking their time and making educated decisions. It’s okay to take 2 or 3 weeks to get to contract. And while there’s a more standard pace to the business now, it’s still much more efficient than pre-pandemic.”
Other real estate professionals confirm that the market is slowing a bit, returning to a pace and timing that more closely resembles the pre-pandemic market. “We are definitely reverting to a normal cycle,” comments Judi Desiderio. “Spring and fall are the busiest seasons, and July and January are the slowest months.” Tim Burch agrees. “Traditionally, before the pandemic, the market slowed down from Thanksgiving to mid-January. It looks like we are back to that.”
On the other hand, Mr. DePersia is ready for a jump start in 2023. “Buyers are serious and I predict that the Hamptons market is going to heat up early in January,” he comments. “Buyers want the Hamptons because they want the location – and the Hamptons is still underpriced relative to such markets as Palm Beach, Miami or Aspen. Simply put, buyers have a lot of confidence in Hamptons real estate. This has been a very heady time in luxury real estate, and the Hamptons market is not going away. I am still very bullish on the market.”
As 2022 draws to a close, the current market buzzword is ‘education’. Not only have the buyers and sellers benefitted from a pandemic educational period, but so have the real estate professionals. “I am as sharp to the market as I can possibly be,” comments Kyle Rosko. “When you accomplish 8 years of transactions in 2 years, as we did during the pandemic, your skill level is top notch. Personally, I am thrilled that I have been able to step up and show up for my customers in a real way.”