Marketwatch: The Hamptons

What 2023 delivered and what to expect from 2024

Changing demand, limited inventory, and increasing rates shifted the 2023 market. For a sense of what last year delivered and what 2024 has in store, we talked to real estate experts on the East End. 

“In 2023, the Hamptons real estate market saw swift transactions for homes under $2 million due to pent-up demand and limited inventory,” says Kimberly Cammarata, Associate Broker, Douglas Elliman Real Estate in Westhampton Beach. The market, she says, “flattened out towards the end of 2023, leading to increased inventory and tempered price growth.”

The 2021 and 2022 sales activity, says Harald Grant, Licensed Associate Broker with Sotheby’s International Realty in Southampton, was ‘unprecedented’. “We know that that level of business was not sustainable, and surely no one would want another pandemic,” he says. “It is inevitable that our markets would make a swing back to a more ‘normal’ cycle.” 

The number of real estate transactions in 2023, says Philip O’Connell, Executive Managing Director, Brown Harris Stevens, Hamptons, was approximately 25 percent fewer than in 2022, and at the lowest level in 10 years. “Although the number of sales was significantly lower,” O’Connell says, “the dollar sales volume was fourth highest in the past 10 years.” 

The lower 2023 numbers, O’Connell says, are a result of the lack of inventory and higher interest rates. Owners held onto their homes for longer, “trading up was significantly more expensive due to the rates, and trading down you could potentially pay the same or more for less house,” he says. 

Although many of the buyers in the Hamptons, Harald Grant concedes, are cash buyers, higher interest rates impact “general sentiment, resulting in a lower sense of urgency.” Fewer homes, Grant also notes, are coming to market. With low inventory, asking prices remain high. 

“Expectations for the 2024 market are optimistic, with sellers making the move to list their properties and buyers more able to find the opportunities they’ve long desired,” Cammarata says. “Increased inventory and buyer activity are anticipated, suggesting a more robust market compared to 2023.”

As far as 2024 is concerned, there are some stabilizing forces at work, O’Connell says. “Buyers, post-pandemic are mostly looking for a second home, where during the pandemic years, a large percentage of buyers were seeking a year-round residence,” he notes, signifying that the market is returning to what it looked like before 2021 in terms of desires and trends. The rental market, Grant says, appears to be starting strong in Q1 of 2024. “We’ll see if that maintains as we get closer to the summer months,” he says. 

And, according to O’Connell, interest rates may soon be on the decline. “The Fed has signaled that the Fed Fund rate will drop, which should impact mortgage rates,” he says. “The lower rates will drive additional buyers into the marketplace with the same limited inventory.” 

What remains to be seen, he says, is whether or not the rates will decline enough to drive homeowners out of their existing and financially comfortable situations: that, of course, is the wild card, and the Fed’s decision about rate decreases may determine how 2024 plays out in the end. “Throw in that this is an election year, and the fact that the market tends to slow starting in August,” he says. “Two thousand twenty-four will be an interesting year!”