Hamptons Listing Inventory v. Number of Sales. COURTESY MILLER SAMUEL INC.
Hamptons Median Sales Price v. Number of Sales. COURTESY MILLER SAMUEL INC.
New Signed Contracts v. New Listings. COURTESY MILLER SAMUEL INC.
The number of homes that sold on the South Fork in the fourth quarter of 2022, as the market retreated from pandemic-driven highs, was around half the number that sold during the same quarter in 2021.
Fourth-quarter reports by Douglas Elliman Realty, the Corcoran Group and Town & Country Real Estate — despite using different geographies and methodologies in compiling Hamptons sales data — all reached the same conclusion that the sales count was down by approximately 50 percent in the fourth quarter, year-over-year. Representatives from each brokerage offered various explanations for the decline and gave positive outlooks for 2023.
Judi Desiderio, the founder and CEO of Town & Country, put the sales drop in context by comparing the recent quarter to that of 2019, before the pandemic led to a “COVID wave” of sales.
“It turns out that, well, 355 sales in the last quarter of 2022 was almost a 50 percent decline from 2021,” she said. “It still beat out 2019, where Q4 was 248 sales.”
She pointed to a number of reasons why the most recent fourth quarter was slow, starting with the hike in interest rates.
“Interest rates increased at the highest rate ever in history,” she said. “They more than doubled, almost tripled, from just 18 months ago. So that makes people kind of pump the brakes.”
She also noted the war in Ukraine and the supply chain and import-export issues it contributed to, and said high inflation caused luxury buyers to “pump the brakes.”
“Ours is a luxury market,” she said. “So they don’t have to have what we’re selling. They could rent. They could go to Europe. Two years ago, nobody went to Europe because it was COVID. They could go to Europe now — and a lot of people did last summer.”
Desiderio also noted that Suffolk County, due to a hack of its computer systems, was unable to report deed recordings for a time during the third quarter of 2022. “So the question is: How many of those recordings would have been in the third quarter that ended up recording in the fourth quarter?” she said.
Had some trades been recorded in the third quarter rather than the fourth, the fourth quarter would look even worse, she said. But regardless of the hack, she said that both the third quarter and the fourth quarter saw declines in 2022.
Desiderio reported activity has picked up in the new year and that low inventory continues to support home prices, even as certain segments of the market get hit.
“The general market is fine,” she said. “The median-priced homes are fine. If you’re looking for a house under $2.5 million, you’re not the only game in town. There’s a bunch of people out there vying for the same product. … Thank goodness we’re not like the rest of the country that is in a housing recession.”
She expects that buyers who rushed to get a house on the South Fork during the pandemic will not turn around to sell those homes now.
“I never use absolute terms, but I would say that the majority of the people who panic-bought are holding tight,” she said. A South Fork house is a safe haven if something happens in New York City again, she said, and the owners still have the option to go to Italy for July while renting their house out for income.
Todd Bourgard, Douglas Elliman Realty’s CEO for Long Island, Hamptons and North Fork, attributed the fourth-quarter sales decline to low inventory.
“We have an abundance of buyers, and we have lack of inventory,” he said. “So when these houses come up on the market and they are priced properly, we are still finding ourselves in multiple bid situations very often. And it’s not unusual for these to go above asking.”
The Elliman Report showed listing inventory for single-family homes grew by 12.2 percent to 865, year over year. Even with the uptick in listings, the number of houses for sale remains very low — there were 2,119 listings at the end of 2018, according to the Elliman Report, and 1,831 at the end of 2019.
“We have far more buyers than we do sellers right now,” Bourgard reiterated.
He offered the example of Country Pointe Estates, a new 22-home subdivision in Westhampton Beach by Beechwood Homes, represented by associate broker Enzo Morabito. Within a week of the listings going live, Morabito is already in negotiations for two $1.95 million properties and one $2.8 million property, Bourgard said.
“The buyers are there,” he added. “They’re just waiting for something to come on the market.”
The report also found that the median sales price for a Hamptons single-family home fell by 10 percent from the fourth quarter of 2021 to the same quarter in 2022, from $1.5 million to $1.35 million. Bourgard attributed this to prices leveling out after reaching absolute peak numbers in 2021, but also noted that prices still exceed prepandemic levels.
“Though prices are not as high as they were during the pandemic, they’re still historically high,” he said. “So the people that were on the fence are still putting those homes on the market. They are getting a very good return on their investment, as they always have in the Hamptons.”
Ernie Cervi, Corcoran’s regional senior vice president for the East End, sees the market as normalizing.
“We’re not in a COVID market for buyers or sellers,” Cervi said.
He added that what has been consistent is that there is not a lot of inventory available.
“There are people ready to make a purchase,” he said. “We just need the inventory.”
One reason he gave for why inventory has remained low is rising interest rates.
“If someone is sitting in a house and paying 3 percent on their mortgage, they might hesitate to list their house and go somewhere else and pay 6 or 7 percent,” he said.
Cervi added that talk of recession also impacts transactions.
“It’s really hard to gauge, but I think we will see some more inventory and I think the prices are going to stay about where they are,” he said. “But it’s a good time for a buyer because there isn’t a lot of competition and they might be able to negotiate a better deal now than they could have six months ago.”
Bidding wars are not very common right now, he added.
He advised both potential buyers and potential sellers not to wait to make a move.
“Some people may decide to wait but … you can’t time a market, whether it be stock market or the real estate market,” he said. “You just don’t know.”
He added: “You don’t know if you wait if you’re going to get more, if you’re going to get less. If this is the time that works for you to sell your property, we’ll find a buyer.”
One fine body…