In 2020, the real estate market was a feeding frenzy. Properties that had been on and off the market for several years finally found buyers interested at their perceptively high asking prices. In 2021, though COVID waves came and went, buyers were more clear and patient regarding their real estate goals, while the majority of Hamptons property owners clung to their homes for dear life.
Many real estate professionals predicted that the latter part of 2021 would see an increase in listing inventory, but on January 1, 2022, supply was down 48.6% compared to January 1, 2021 – to less than five hundred listings available from Southampton to Montauk.
The result was high pricing in response to declining inventory. The annual median sale price increased 18.5% year over year and sold listing volume increased 5.3%, despite the 11% decrease in the number of sold listings.
In fact, the 2022 summer rental market picked up as soon as the New Year hit, as wishful buyers are beginning to realize that they will probably need to rent again in 2022, if they want to stick their toes in the sand.
Overall, sellers motivated by their own timing goals responded well to the market, resulting in most properties trading at a discount, but also achieving historically high prices in 2021.
Hamptons sellers can have high expectations, but the reality is, completing renovations and other property work in the Hamptons today remains a challenge – mostly due to continued supply and labor shortages. Data showed that in 2021, Hamptons home buyers were willing to pay 10-30% more for a move-in ready home to avoid a home renovation.
When presented with a property that needed extensive work, end-user buyers were looking for a discount in 2021 – or to see value in the list price – more so than in 2020. This trend is anticipated to continue into 2022.
Though there is no way to know the precise number, a healthy number of deals in 2021 ended up falling apart once the true costs that came with purchasing and renovating a property were revealed during the discovery process. After a brief pause during 2020’s shutdowns, in 2021 builders and developers increasingly had the advantage in the land and land value portions of the real estate market.
Developer offerings oftentimes are advertised with the completed home price, but ultimately close for the value of the existing parcel with a separate agreement between the builder and homebuyer for the construction of the home. These listings made up all of the ten properties that closed for the most below the list price – but it is also what made them most appealing to their respective buyers. Going this path to closing can come with tax advantages and cash savings over the sale of a finished product. Always consult a tax professional prior to transacting.
Hamptons sellers were shrewd as well, and they knew that land had increased in value, regardless of what they had on it. In Q4 2021 alone, the value of Hamptons land increased approximately 10%. In 2021, Hamptons sellers overall were 48.3% less negotiable than they were in 2020.
Well priced renovated homes and new construction listings continued to gain interest from multiple parties through 2021 and we anticipate this will continue in 2022. It has never been a better time to invest in Hamptons real estate, given the percent over the asking price buyers are willing to pay not just for work already done, but also for a home that is at least maintained to today’s standards.
In 2020, homes constructed in the early 2000’s traded for some of the largest discounts. But in 2021, a home built in 2004 achieved 17.6% above the last asking price – it was well maintained, clean and smelled good.
With 35% of listings achieving the listing price or more in 2021, compared to 24% in 2020, even real estate agents were surprised by the 2021 market – and we predict everyone will continue to be surprised in 2022.
Stats and charts can be viewed at Hamptons Market Data.
Adrianna Nava is the founder of Hamptons Market Data and a licensed associate broker with Compass.