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Sales and Median Prices Decline for the First Time Since 2019

It may come as no surprise, but the first quarter 2023 sales numbers are in and they are….down again, even in the Hamptons, which is usually insulated from downward pressures associated with other national real estate markets. With this in mind, a number of local real estate professionals unboxed and analyzed these numbers in recently-published proprietary market reports. Diving into these report details side by side highlights expected market trends; however, there are a couple of surprises hidden in that data. Let’s take a look…

For the sixth consecutive quarter, the total number of Hamptons home sales is down; however, for the first time since 2019, the median and average home prices fell. Hamptons power broker Tim Davis of The Corcoran Group sums up recent Hampton’s market movement in his most recent East End Market Report: 

Represented by Tim Davis of The Corcoran Group

“In First Quarter 2023, South Fork single-family home sales fell 30% year-over-year, the sixth consecutive quarter of annual decline. This period was the slowest first quarter since 2013, with 12% fewer sales than the First Quarter of 2019… The first Quarter of 2023 recorded the first annual drop in average and median prices since 2019. Year-over-year, the average price fell 7% and the median price was down 8%. The decline in transactions and price indices lead overall dollar volume to drop 34% annually although all price ranges saw sales decline by at least 25%, the highest and lowest price ranges exhibited the sharpest declines.”

Home sales volume decreased by 49.5% compared to last year; the total number of home sales was down by 44% for the same period – data that indicates that a lack of housing supply directly impacts the volume of sales. In fact, for the past year or more, many local real estate professionals have claimed that lack of supply has been the greatest issue facing the Hamptons real estate marketplace. Tim Davis shares real inventory numbers: 1735 listings at the end of Q1 2023, representing a slight increase of 1% annually and 0.1% quarterly.

Douglas Elliman’s most recent market report (compiled by real estate appraisal firm Miller Samuel) states that lack of supply has led to a sharp drop in total deals, with sales volume down 57% in the first quarter. While there seems to be no question that supply continues to be an issue across the East End of Long Island, headwinds from the financial markets and other global factors seem to be taking precedence – among them, the most recent interest rate hikes by the Federal Reserve, unsettled stock and equity markets and global unrest.

Represented by Town & Country Real Estate

In her recent market report, Judi Desiderio, CEO of Town & Country Real Estate, sheds some light as to why the Hamptons market is trending downward. “As any Hamptons Real Estate Broker will tell you, business took a turn in June 2022 then went on vacation elsewhere from Thanksgiving through February. Therefore, it is no surprise that the Town & Country Q1 Home Sales Report shows a lot of red. In fact, all 12 markets we monitor had decreases in the Total Number of Home Sales as well as declines in the Total Home Sale Volume. Why, you ask? The retreat began with interest rate hikes at an unprecedented pace, due to the highest inflation in four decades, not to mention a stock market that gave even a seasoned investor whiplash, while geopolitical tensions escalate and a ground war ensued, the likes of which we’ve not seen in decades. With all those negative influences, it comes as no surprise for buyers to take a pause.”

In the most recent market report issued by Brown Harris Stevens, Executive Managing Director Philip O’Connell concurs: “The pace of sales in the Hamptons real estate market continued to slow down during the First Quarter of 2023, impacted by ongoing economic concerns with interest rates, inflation and talk of a looming recession, as well as persistent lack of inventory at the local level.” Taking these factors in the aggregate, one might think that the prevailing seller’s market for the past few years has flipped into a buyer’s market. Not so, continues the analysis in the BHS market report: 

Represented by Brown Harris Stevens

“Traditionally, fewer sales and lower prices would indicate a shift from a seller’s market to a buyer’s market, but this is not the case in the Hamptons today. The third required element of a buyer’s market – a surplus of available homes – is absent. In fact, the inventory level of homes on the East End is still at near record-low numbers and is the major local factor impacting the rate of home sales today. With fewer homes for sale, today’s buyers are willing to spend more time searching for the right home at the right price, no longer willing to pay a premium for expediency as we witnessed during the previous two years. Likewise, serious sellers are coming to terms with the fact that ‘Pandemic pricing’ is over and listing prices are being adjusted accordingly.”

Douglas Elliman’s report took a decidedly more upbeat position, indicating that the average price for a house in the Hamptons hit a high note of $3 million for the first time. Anecdotal information from that report states that the average price in the Hamptons is now more than $1 million higher than the average sales price in Manhattan, marking the largest gap between the two markets since Miller Samuel started collecting that data in 2005. This report also indicates that the median and average sales prices in the luxury Hamptons market (the top 10% of sales) surged 33% to $16.1 million, fueled by a number of home sales in the tens of millions.

Douglas Elliman’s Martha Gundersen, an associate broker in the Bridgehampton office, explains why her firm remains bullish on the Hamptons market despite the apparent headwinds. “We are very optimistic about the future of the Hamptons real estate market. The fundamentals are very strong. The federal reserve raised the interest rates so quickly and aggressively to combat inflation, but this is a much different problem than the crisis we saw in 2008 in regard to real estate. We’ve done well, but expect to do better in the future when the Fed stops raising the interest rates and things normalize. We’re confident the real estate market will turn around. Once inflation comes down, I think it’s off to the races.”

Represented by Martha Gundersen of Douglas Elliman Real Estate

A couple of nuggets buried in the data were quite surprising – but pleasantly so! Several markets west of the canal – Westhampton and Hamptons Bays in particular – saw an uptick in median/average pricing and an increase in sales volume. From the T&C Report: “In Westhampton [which includes Remsenburg, Westhampton Beach, East Quogue, Quogue and Quiogue], the Median Home Sales Price rose 5.56% to $1,425,000 up from $1,350,000…Hampton Bays also ticked up the Median Home Sale Price by 3.32% to $777,000.” Likewise, Tim Davis reports that “… areas west of the Canal perform[ed] better than those to the east. Westhampton Beach saw the most significant growth in median price, up 41% year-over-year…”

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