Hamptons Real Estate Roundtable: Memorial Day 2023 Edition

The Express News Group recently asked an array of South Fork real estate professionals to share their sense of the state of the Hamptons market and where it will go from here. As Memorial Day weekend is soon to kick off another season, a few things are clear: Prospective summer renters who have yet to sign a lease still have plenty of opportunities, while landlords would do well to lower their expectations in terms of price. Homebuyers continue to struggle with a deficient number of homes for sale limiting their options. Homesellers still enjoy strong sales prices, and anyone considering selling should move quickly. Things are not quite what they were pre-COVID, but they are normalizing.

What is the mood of the Hamptons housing market as the summer season is about to begin?

Judi Desiderio: The Hamptons housing market is divided. Sales have picked up since March. Rentals were slow until recently. The differences are further noted in inventory. Sales inventory remains light while rental inventory is flush.

Todd Bourgard: The mood of the Hamptons housing market is upbeat. Buyers are plentiful, and while inventory is still not meeting demand, they remain enthusiastic.

Ashley Farrell: Your mood will shift considerably depending on your role in the market. For sellers, you’re feeling pretty great at the moment. We’re in a seller’s market, there’s little competition, and prices are high. Of course, this creates some frustration and can be discouraging for buyers. On the rental front, tenants are riding high with plenty of options and all the power during negotiations, while landlords saturate the market, vying for the attention of a diminutive number of tenants.

Rebekah Baker: With the weather warming up and all the trees and flowers starting to bloom everything is starting to look so beautiful. You can’t beat this place — so bucolic and yet close to one of the most influential cities — New York City. Buyers are starting to come out with the summer weather, and it feels exciting.

Timothy Burch: The mood and forecast remain positive for the Hamptons market. The benefit of low inventory for sellers is that prices/values remain strong and new sales listings priced/positioned correctly are still seeing a flurry of activity, many with multiple offer situations.

For buyers, coming in strong on the initial offer/engagement with sellers is key. Sellers and buyers seem to desire less negotiating than in the past, and getting to price/terms that appeal to both sides quickly is preferred.

Geoff Gifkins: We had a late start to the rental season and sales slowed dramatically. The pace of the previous two years could not be sustained. Rising interest rates and concerns regarding the global economy historically affect our area, especially in the second-home market.

Terry Cohen: As always, when it’s sunny, the mood is great in the Hamptons! In all seriousness, we still have an imbalanced ratio of supply and demand. Anything new or reads new that is a good value play on land is desired and trading in a market not much different than before. Where I see a little bit of more thoughtfulness is when the product is somewhere between land and new construction (reads new).

Following slow sales activity in the first quarter, has anything changed?

Judi Desiderio: Yes. Thankfully. While we are nowhere near the sales activity of the COVID markets, we are seeing demand pick up. We anticipate that our numbers will come in at pre-COVID levels by year end.

Todd Bourgard: With the increase of available inventory, we are experiencing an uptick in sales as we enter the second quarter.

Ashley Farrell: It’s important to note that slow sales activity is not due to a lack of buyer demand; rather it’s fueled by a lack of inventory and available options. Unfortunately, the Hamptons is still seeing record low inventory, causing below-average sales volume while prices remain steady.

Rebekah Baker: Two things have changed: Interest rates and listing prices.

Let me start with mortgage rates: The Hamptons market is more insulated to the interest rate environment than perhaps other markets because so many of our buyers tend to pay cash or frequently waive the financing contingency and then get a mortgage. Those who bought during COVID are locked at 2.5 to 3 percent loans, basically cheap money, and the prospect of trading into another property and doubling their interest rate isn’t so appealing because it’s no longer cheap money. But once the dust settles and people’s circumstances change, and they want to sell, more product will come on the market. Ours is a cyclical market. We love the good times, and we sustain the leaner times. It all balances out eventually. People in the Hamptons get restless and don’t sit on their hands for very long.

As for listing price, that is more important than ever and it’s such a fast-changing market post COVID highs that this is where a seasoned professional real estate agent can shine. Knowing where to price is key. A listing price is simply a marketing tool. The property has a range of value. A well-priced home will attract multiple parties and an aggressively priced home will sit and isn’t viewed by our savvy customers as realistic — an overpriced home helps sell a more competitively priced alternative. So, listen to your trusted real estate advisor and be in the market just not on the market.

Carl Gambino: There has been a recent uptick in activity in the last month, but it’s still much slower than the last few years.

Timothy Burch: It’s important to not only compare Q1/2023 sales activity to that of 2022. If you look at Q1/2019 (pre-COVID) prices and volume are ahead of those results in what was considered a more “normal” market.

Geoff Gifkins: We have had two exceptional years and therefore anything lower than that can seem like a drastic drop. Zoom out, the reality is we are back to normal compared to previous years. No one predicted the COVID era with the tsunami of demand and record prices; however, we all knew it could not be sustained. It’s back to business-as-usual. Houses are selling and renting, just not at the pace we adopted as the norm for the last two years. COVID saved many brokerages and agents. Now the work begins.

Terry Cohen: Slow sales are still because of lack of inventory. Inventory levels have continued to be tight. This is still one of the major reasons for slow sale activity.

What effect is the average mortgage rate of more than 6 percent having on the market?

Judi Desiderio: It’s like a horse pill. There were so many negative factors this past winter in addition to interest rate increases the speed of which we’ve not seen, but there remained a ground war the likes of which we’ve not seen in decades and the stock market was on a wild ride and there were supply issues — too many negative factors that cause people to take a pause.

Todd Bourgard: In the Hamptons, the average mortgage rate has less of an impact on purchases and the buying power of clients, as a substantial number of deals are closed with cash.

Ashley Farrell: In the lower end of the market, higher mortgage rates are having the greatest effect. Buyers’ affordability has changed drastically in the last 18 months. When evaluating mortgage history, however, 6 percent is not a high interest rate. The 1980s saw rates above 18 percent! Remember, rates are temporary, so, “date the rate and marry the home.” In other words, don’t let your permanent dream house pass you by due to a temporary rate.

Rebekah Baker: Again, this impacts everyone, even the buyers at the higher end who don’t want to take money out of their portfolios will look to borrow money for a purchase. It means that buyers across the board are not jumping into purchasing a property without doing research. They want to know if they purchase a home right now and if for some reason they have to sell 12 months from now they will be OK. It means the agent they are working with must supply comps for pricing and has to justify a selling price and all due diligence must be done.

Carl Gambino: The mortgage rates caused fewer contract signings and has decreased the buyer pool.

Timothy Burch: While many deals in the Hamptons are cash purchases, buyers with financing did in many cases pause, but now the new normal of rates is setting in and motivated buyers are coming back in the market.

Geoff Gifkins: It affects many buyers. Rising interest rates decreased their purchasing power and can limit the range they can afford. It also affects those who have already bought and their ability to refinance. There is also now a concern when low-rate ARM mortgages reset to higher rates. Some buyers are also sitting on the sidelines in hopes rates drop, rather than commit now. This in turn softens the demand.

Terry Cohen: From my conversations with customers, the mortgage rate is a consideration in people’s overall decision to buy a home. Money isn’t free anymore!

Does low inventory continue to be a challenge for homebuyers and agents?

Judi Desiderio: Below $3 million, yes. In fact, the lower the price the more challenging the inventory numbers.

Todd Bourgard: Yes. Low inventory is clearly an obstacle to a robust market.

Ashley Farrell: Absolutely! This is hands down the biggest challenge homebuyers and agents are facing. The buyers are ready, they’re anxious to purchase, but even those willing to be flexible on criteria are finding the process difficult. My best advice to buyers is to jump on an opportunity as soon as a home hits the market. Time is currently your biggest enemy.

Rebekah Baker: As the inventory lowered, it was very important for agents to speak to one another and try to think creatively — matchmaking for buyers looking for a particular type of property that they couldn’t find on the market with an owner who had thoughts of selling but hadn’t listed their house. I don’t think people realize what a small community of agents we have out here and how much we all speak with one another. These are important relationships we have with our fellow agents, and I appreciate how we can work together to accomplish the goals and dreams of our sellers and buyers. I am here for the long road, and relationships and one’s reputation are everything. So as an agent if you have a buyer looking for something that they can’t find on the current market it is time to pick up the phone and make calls to fellow agents and owners who may be on the fence for selling.

Carl Gambino: Lack of good inventory is still an issue. You have to really dig for good properties.

Timothy Burch: Low inventory does create challenges for buyers and agents. The key as I mentioned earlier is to come in strong and prepared on the first offer/engagement. Get the seller’s attention and get the deal done quick. I have a team member with three accepted offers in a week utilizing that strategy.

Geoff Gifkins: Yes, it is still challenging for both buyers and agents. Many buyers are competing for good inventory thus creating bidding wars. The busy agents struggle to find off-market listings to satisfy their buyers’ demands.

Terry Cohen: Yes, absolutely.

Is the Hamptons still in a seller’s market?

Judi Desiderio: Again this depends on the price point and location.

Todd Bourgard: Yes. The market is based on supply and demand and with supply low and demand high, the seller’s market remains.

Ashley Farrell: Yes. The continued buyer demand, coupled by the ultra-low inventory continues to keep us in a seller’s market with steady prices and multiple bid situations. If you’re a homeowner considering selling within the next one to five years, now is the time. The market is cyclical and will begin to correct itself. From there, it will be some time before we see another seller’s market.

Rebekah Baker: Yes, but a delicate yes. The seller has something the buyer wants, and in a lot of cases the seller out here doesn’t have to sell. They can hold on to their asset. But there is a divide happening where sellers are looking at prices from the past — over the last few years — and saying, “I want that price. The price my neighbor got in 2021.” But with rates being higher and market uncertainty, the buyer will just wait — they are not forced to purchase at this moment if the seller’s asking price seems aspirational. So, you have a bit of a stalemate. But if there is some give and take on both sides, you can get a deal done. Again, this is when the agent and their experience will come in to bring about this meeting of the minds.

Carl Gambino: The Hamptons has transitioned into a buyer’s market except for rare coveted properties.

Timothy Burch: I would say yes because of low inventory. If someone is thinking about selling anytime in 2023 or 2024, they should be planning now and list sooner rather than later with expectations of more inventory after summer season.

Geoff Gifkins: We are in a transition, moving the needle from a seller’s market toward a buyer’s market; lower inventory limits the buyers’ choices and median prices continue to climb. Demand from buyers has eased significantly over the last two quarters.

Terry Cohen: Depends what you are selling. As I’ve said, if you have new construction or a home that reads new, you are still getting a good number for it.

How has the 2023 rental season shaped up?

Judi Desiderio: It took a long time to launch, but were at full throttle now. But in the end there remains too much rental inventory.

Todd Bourgard: The 2023 rental season has been a good season so far and is gaining momentum. Who wouldn’t want to spend the summer in the Hamptons?

Ashley Farrell: The rental market has been the polar opposite of the sale market. There is an abundance of inventory but not enough demand. During the pandemic, many previous tenants upgraded to homeowners. As life returned to normal, these new owners became landlords, not only increasing the rental supply, but decreasing the number of active tenants.

Rebekah Baker: We have so much rental inventory at the moment and the demand has lessened. We will see renters looking for short time periods. If an owner really wants to rent, they should look to lower their rental price to 2019 pricing.

Carl Gambino: 2023 rental season is a lot slower than last year. We have seen more broken up monthly rentals, rather than full-season.

Timothy Burch: Rental activity gives the appearance of being slow, but it’s important to understand with all the buying that has occurred over the past three years there are now more houses and less renters in the market. People want to travel again and that includes the new buyers of the last three years. We are seeing more new rental listings coming from these recent buyers who years past may have been tenants.

Geoff Gifkins: Typically, as after a very cold winter, rentals are slow to start. In the last few months, activity has become steady. Tenants need to focus on finding the right property for their needs rather than the steal of the century, and owners need to meet the market in terms of price and value of the offering. Prospective tenants have more options to travel abroad, therefor the rental demand is back to normal.

Terry Cohen: On the high end, it’s been strong. Again we have a supply and demand issue. There is more supply in product in the older home segment, so hence there is more negotiability.

If a rental has yet to be booked by Memorial Day, is there still hope of finding a tenant?

Judi Desiderio: Yes, but only for partial season. For the first time in three years, we are seeing demand for shorter time periods

Todd Bourgard: Absolutely — without question. The days when rentals went from Memorial Day to Labor Day as the standard are behind us. Now, we see many one-month and two-month rentals.

Ashley Farrell: Without a doubt. In fact, those who haven’t yet booked their rental may be on the receiving end of a fantastic deal. Most landlords are still willing to negotiate, understanding some rent is better than none at all.

Rebekah Baker: Yes, a landlord must have correct pricing not aspirational. How are they priced compared to their competition? For people looking to rent there are some fantastic rentals out there right now.

Carl Gambino: There is always hope, but there are fewer renters in the market than usual.

Timothy Burch: There is. Tenants are securing accommodations later and later in the season. However, with the large vacant inventory, owners need to be realistic and list their rentals for the lowest price they are willing to accept.

Geoff Gifkins: There are always options, and owners need to consider different rental options, meet the market in terms of price and in many cases reposition their marketing strategy. Many landlords are frustrated with exclusive rentals and this year many have opted to keep their houses listed to many agencies to increase their exposure.

Terry Cohen: There's always hope! There are a lot of tenants who specifically look for an opportunity The summer doesn’t really kick in until the end of June.

What are you most excited for this summer?

Judi Desiderio: Summer means so many things to me. Boating, fishing, gardening, gathering with friends and family and enjoying the beautiful East End. There are some new restaurants I look forward to trying being the foodie that I am.

Todd Bourgard: I am looking forward to new restaurant openings and enjoying the summer energy in the Hamptons. Very soon, we will be back at the biggest event of the season, the Hampton Classic, where Douglas Elliman has been a huge sponsor for over 25 years!

Ashley Farrell: Everything! The Hamptons really shows off in the summer. I’m ready for a dip in the ocean, tennis matches, wings at John Scott’s, and the return of Tiana’s beach volleyball league. Not to mention, it’s an absolute gift to be able to wear tank tops, dresses, flipflops, etc. without the need for layers or a coat!

Rebekah Baker: Besides swimming in the bay and seeing friends and family, I have important buyers coming out this summer and they do want to buy, and the hunt is exciting. I also love my job and represent some of the most incredible properties that spending time there during showings is like stepping into another life with settings such as dreamy bay front homes away from it all — immersed in nature — village homes steps to bustling town yet with complete privacy and serenity by the pool — and a historic artist home with outbuildings. I am passionate about the places I represent and the dreams that become reality for my buyers. We are very lucky to live here.

Carl Gambino: Family time, delicious food and upcoming art shows, especially at the Ranch in Montauk.

Timothy Burch: I’m excited and hopeful that the mood of owners/visitors/renters of the Hamptons will be that of the joy of being here rather than the past few years where it was more of a necessity to escape the city and urban environments. The Hamptons is a fantastic place to live or visit we all need to get back to that level of enthusiasm.

Geoff Gifkins: Nothing beats summer in the Hamptons: the beaches, outdoor life and welcoming new customers to the area. It is still an ideal escape from NYC, and historically the Hamptons always bounces back better than before.

Terry Cohen: I’m excited for it to begin!