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Source: Miller Samuel, Douglas Elliman
Hamptons real estate ended 2019 on a high note — for the first time in eight quarters, there was a year-over-year increase in home sales.
According to the Elliman Report, prepared by New York real estate appraisal and consulting firm Miller Samuel Inc., the fourth quarter of 2019 saw an 11.1 percent increase in sales when compared to the same quarter a year prior.
It’s much welcome good news for the market.
“I got to tell you, that has a good feel to it,” said Todd Bourgard, Douglas Elliman’s senior executive regional manager of sales for the Hamptons.
Mr. Bourgard and other industry leaders say the uptick in sales is extending into the new year.
“I watched the number of contracts signed in the fourth quarter, and it really was quite incredible,” he said. “And that buzz from the fourth quarter is continuing on right into the first quarter. … The general mood from everybody out there is positive, it’s strong. Sellers, buyers, agents — they’re all excited. There’s just a real good energy level right now.”
Inclusive of both single-family homes and condominiums, the median sales price, $906,250, was down 8.9 percent when comparing the last three months of 2019 to the last three months of 2018. The average price saw a decline of 4.9 percent, landing at $1.91 million.
The median condo price dipped 17.3 percent, to $620,000, and the average rose 9.6 percent, to $766,676. The median single-family home price dropped 5 percent, to $950,000, while the average was fairly steady, dipping just 1.1 percent, to $2.02 million.
But as prices came down, sales went up. The number of single-family home sales rose 4 percent, while condo sales — a small segment of the market — nearly tripled, shooting up 288.9 percent.
Mr. Bourgard cited three factors in the sales rebound: interest rates dipped; buyers adjusted to changes in the state and local income tax deduction, known as SALT; and homes are more appropriately priced.
People have settled into the SALT changes, according to Mr. Bourgard. “They always wait to see how it shakes out,” he said of tax law changes. “It took a couple of quarters.”
Sellers coming down on their asking prices to reflect market value has continued to create a confident market, he said. “Out here, I think what it boils down to is, people are willing to pay market value. And so now that we’ve gotten the price points appropriately priced, people are buying.”
Pricing a home properly is key, and that means looking at the comps, Mr. Bourgard explained, adding: “The comps do not lie.”
Those are the comparable homes that have sold recently and that signal to appraisers and homebuyers what a home is worth. When sellers insist on listing a home for much more than it is worth, it can sit on the market for a long time while generating little interest.
“Regardless of how well the guys in our stock market are doing, they’re not going to overpay,” Mr. Bourgard said. “At this point, I really think we’ve bridged that gap, and everybody has listened and everybody is meeting at a really good point here. We’ve come to market value now, and I think it just took a while to get there.”
Homes that are popular with sellers are new or kept up to date.
“People, they love the new build,” Mr. Bourgard said. “There is no question about it. In the fast pace of today, people like to come in and just move their stuff in.”
He also finds that homeowners are updating their houses about every five years — certainly every 10. “That’s a real trend,” he said. “People, they don’t hesitate to spend their money to update their own homes for quality of life and, of course, for resale.”
Though sales improved, 2019 saw the second-lowest number of fourth-quarter sales in 11 years, according to the Elliman Report.
It was the first time in five quarters that the listing inventory fell compared to the year prior. Inventory was down to 1,919, a 12.7 percent decline, but, as the Elliman Report notes, luxury inventory rose to the highest fourth-quarter number in eight years.
The Long Island market, which excludes the South Fork and North Fork, had quite different results from the East End. In that market, the median price for one-to-three-family homes and condos rose 5.6 percent, to $455,000, and the average rose 3.8 percent, to $522,413. The number of closed sales ticked up 2.1 percent, to 7,611, while inventory reached a record low, 8,944, a 6.6 percent drop, following three straight quarters of year-over-year increases.
The report noted that the median sales price for the Long Island market has not seen a year-over-year decline in 27 quarters.
The Corcoran Group prepares its own report, with its own methodology and a slightly different geography. Corcoran’s report includes every sale that was recorded by the county and reported during the fourth quarter, regardless of the closing date. So some sales that occurred during the third quarter of 2019 or earlier are included in the fourth-quarter statistics, and some fourth-quarter sales will appear in future reports.
The Corcoran Report for the South Fork found that after four straight quarters with year-over-year declines, reported closed sales in the fourth quarter rose 3 percent. The average price, $1.84 million, was down just 1 percent, while the median, $999,999, didn’t move.
“We ended the year on a high note for both forks: South Fork up 3 percent and North Fork up 15 percent,” said Ernie Cervi, the regional senior vice president for Corcoran’s East End division.
Buyers had been watching prices, and prices did decline, Mr. Cervi said. “They felt value was here, so they took the opportunity and seized it.”
He said it came as no surprise that the fourth quarter ended where it did, based on the activity that Corcoran experienced.
“For the most part, sellers that are serious have repositioned their prices for the beat of the current market, and those are the areas where we see product moving,” he said.
He also saw the impact of the changes to the SALT deduction lessen. “Psychologically, anytime there is a change in the tax structure, such as the SALT tax, people do pause for a while, but then usually come back in,” Mr. Cervi said, “and I think we saw that happen.” And it helps that interest rates are at an all-time low once again, he added.
Though the Hamptons did not see the same gains as the Long Island market, Mr. Cervi pointed out that the Hamptons is never expected to behave as the Long Island market in general does.
“We don’t follow the Long Island market,” he explained. “We’re a second-home market — a second-, third-, fourth- or fifth-home market. So, it’s usually different. We follow, more, the New York market, usually behind about 90 days.”
Agents on the East End are talking to the same buyers who bought in New York, he said. “What happens on Long Island doesn’t really impact what happens here, whether it be positive or negative.”
Inventory dropped 22 percent from the third quarter of 2019 to the fourth, Corcoran found. This is not as telling as the year-over-year drop would be, but that precise number was not available.
Mr. Cervi noted that, because the listings system for the Hamptons market changed in 2019, an accurate year-over-year inventory count would not be available again until April 2020. The new way of counting is more realistic because now when a contract expires the listing is removed from the count, he said.
