We asked Hamptons real estate professionals to recap 2022, share a snapshot of the market as things stand now and predict what buyers and sellers will see in the months ahead.
In what ways did 2022 meet or defy your expectations for the Hamptons real estate market?
Judi Desiderio: January 2022, we were all still riding that fabulous COVID wave. Of course, everyone knows nothing lasts forever — so we all anticipated the rush to taper. But no one saw the fast and furious pounding of rate increases slammed upon us, and the brutal ground war [in Ukraine] that ensued, or the supply interruptions, which, combined, created a perfect storm — in a bad way.
Ashley Farrell: Perhaps I’m unique in this aspect, but I don’t set expectations for the market each year. Instead, I roll with whatever comes. For me, it’s more effective to focus on my personal and professional goals rather than try to predict macro market conditions.
Cindy Scholz: Markets are always difficult to predict. Many anticipated a softening in the real estate market post-summer, and that did not happen. Many people returned to New York City, yet, still, the demand for second homes and an escape from the city remain constant despite the uncertain global economic climate.
Todd Bourgard: Based on the 2019 pre-COVID performance, 2022 met and exceeded expectations. It’s difficult to use 2020 and 2021 as benchmark years. It was a rare moment in real estate history that is beyond compare.
Tim O’Connor: Limited amount of sales inventory across all price points occurred during the second half of the year, which frustrated me and the group of my clients anxiously looking for a home out east. After a constant stream of activity for the last two years, it was like a switch was turned off. But there are still so many interested buyers in the market.
John Wines: The real estate market in the Hamptons started 2022 with strong sales building on the momentum of recent years; however, transactions in the second half of the year experienced a substantial decline. Although our firm, Saunders, defied the headwinds and enjoyed its third-best year ever, the preliminary data indicates that 2022 resulted in the fewest contracts being issued on the South Fork since 2019. And, in fact, it appears to have been one of the worst years for deal origination on the East End over the past decade. However, this should not have been entirely unexpected, given the record-breaking sales volumes of 2020 and 2021. One had to assume things would eventually revert to the mean and level off at a more healthy, reasonable pace. Instead, it was more the sudden nature of the drop (and the reasons that precipitated it) that caught many off guard. Few started 2022 expecting a sharp decline in equities and bonds, an unprecedented rise in interest rates, red-hot inflation, war in Europe, etc. In fact, the major institutions on Wall Street were predicting quite the opposite — forecasting a run at 5,200 by the S&P 500 rather than a drop to around 3,800. For this reason, it’s important to always maintain perspective about real estate in our area. While it’s impossible to predict and know the short term, the fundamentals here continue to look very healthy for those with a longer time horizon. We believe there’s lots of reasons to remain bullish about the prospects of Hamptons real estate going forward.
Simon Harrison: Our firm still has houses we sold under construction at various stages, from $2 million to $10 million, as we wire frame deals pairing land/teardowns with houses to match. When we picked our heads up over the holidays, we saw that inventory is very slowly coming in, so we read the tea leaves well.
Marilyn Clark: The first half of 2022 was very much like 2021, with active buyer demand and bidding wars. By the third quarter, inventory was clearly thinning out and the number of transactions started to decline. By the fourth quarter, transactions were down by half. As the stock market started to falter, interest rates rose and there were recession predictions. We saw hesitation from buyers while they waited to see how things settled, but that period of hesitation was short-lived.
Kalen Raynor: 2022 was a very strong market in the Hamptons overall. In August, we started to see a market shift, and adjustments were being made. The rise in interest rates slowed sales, which began to halt the rise in values we saw due to the pandemic.
What is the climate like for homebuyers in the Hamptons at the moment?
Judi Desiderio: Each market moves independently and each price range has a different audience — so this is too broad a question to answer with one dart. At the lower end (below $3 million), there are many on the buyer bus — so, buyers, beware not to think you’re the only one at the table. While we have seen price adjustments in many markets and price ranges, most have already been posted since the slowdown in sales is more than 6 months old. So “waiting to time the bottom,” as everyone knows, is a poor objective in both markets: real estate and stock.
Ashley Farrell: The new year has brought a resurgence to the Hamptons market. During midwinter, historically our slowest time, we are seeing weekends full of showings, numerous inquiries for newly listed properties, and strong bids. The market remains competitive, but there are opportunities for savvy and patient buyers.
Cindy Scholz: Demand is strong and inventory remains low. The market is hyper-efficient. Well-appointed homes that are priced within the market are being absorbed.
Todd Bourgard: The homebuyers in the Hamptons are abundant and continue to be anxiously anticipating new inventory. They are displaying patience and diligence as they await their perfect home.
Tim O’Connor: Similar to the height of the COVID rush, buyers need to be ready to act immediately when a new property hits the market. If the property is priced correctly, it will move quickly, and a buyer has to be ready, most likely with no contingencies, to win the bid.
John Wines: The Hamptons housing market continues to pose some near-range challenges for prospective buyers largely thanks to a persistent shortage of available homes. The reduced inventory has helped to keep prices elevated. Furthermore, a significant number of properties currently available require extensive renovations to meet buyer expectations. The dearth of high-quality starter homes on the East End, coupled with the rapid absorption of limited new inventory, only adds to the difficulties facing homebuyers in the area. In light of these challenges, it becomes increasingly more important for buyers to work with a knowledgeable and experienced East End real estate agent to effectively navigate and overcome these market obstacles.
Simon Harrison: There are values in every market, at asking prices as well, including this one. The buyers that are not mortgage contingent are expecting sizable discounts, and they’re not getting them, partly because sellers are at 3 percent or less (if they even have a mortgage).
Marilyn Clark: Many buyers are frustrated, since there is still very little inventory. There were expectations that sellers would need to put their houses on the market due to global market conditions and that prices would come down, but that is not what has happened. In fact, median prices are up in spite of the predictions. Though the frenetic pace of the market at the height of the pandemic has cooled off, there is still high demand for realistically priced properties.
Kalen Raynor: At the moment, there is still a lack of inventory in the Hamptons. The rise in interest rates has caused some buyers to not have the same affordability as they did in the past, which creates less competition when a buyer is looking to purchase a home. Sellers are a bit more negotiable then they have been in the past.
What’s it like for sellers?
Judi Desiderio: The key word is “acceptance” — accept that the COVID wave eclipsed. While we don’t anticipate a housing recession like the rest of the country, we certainly see fewer closings and more contemplation and caution on the part of buyers. So, have patience and take this time to beautify your homes.
Ashley Farrell: The market remains in a place where inventory is low and demand outweighs supply. Homeowners are still able to take advantage of a seller’s market. Those whose homes are priced realistically are being rewarded, while sellers who insist on more “aspirational” pricing are experiencing difficulty in navigating a quick sale.
Cindy Scholz: Sellers will not have five-plus bidders, as we saw when money was essentially free; however, there are very real buyers in the market. Renovated homes are trading well, as many buyers do not want to dedicate the time and cash to renovations.
Todd Bourgard: Sellers remain in a wonderful position regarding pricing and options. While interest rates have risen, it has not affected the ability for buyers to be willing and able to make a purchase, therefore continuing to create multiple-offer situations.
Tim O’Connor: It is still a seller’s market; however, the property needs to be priced correctly or it will not move and just sits on the market. Buyers are not as desperate and will not pay premiums, even with the limited inventory situation.
John Wines: The current climate for home sellers in the Hamptons can be best characterized as a dichotomy. There is still high demand for new turn-key homes, with prices remaining firm due to the lack of inventory. Even the sale of some older homes is showing resilience, but only if the properties are priced realistically. On the other hand, if sellers are seeking premium prices for homes in need of substantial work based on the pandemic driven activity seen in prior years, they may experience softer market conditions with a longer time on the market being a likely outcome. To maximize their chances of a successful sale, home sellers in the Hamptons should be strategic in their pricing approach and take into consideration the current market dynamics.
Simon Harrison: I picked up a personal check in a sandwich bag for $1.8 million to firm a seven-day purchase in Bridgehampton, and the buyer was giving me thumbs up through a closed window. I had contracts signed on a small house in rough shape for $975,000 in 10 days after 12 different bids, and we had it listed for $829,000. Those days are gone.
Marilyn Clark: In general, sellers are still benefiting from a strong market. Since buyers are not getting the discounts they expected, there is more negotiating over smaller items, so it’s not quite as easy to come to terms as it has been for the past few years. Also, sellers who have move-in-ready homes are having an easier time selling their houses than homeowners who have older homes that need updating. It’s a good market to sell as long as sellers are realistic about their asking prices.
Kalen Raynor: Home sellers are going to see their homes on the market for a longer period of time than they have seen in the past. However, with the right market guidance from their Realtor, sellers can still achieve excellent prices, and in some cases we are still seeing bidding wars.
Are any price points or villages more active than others?
Judi Desiderio: Below $3 million.
Ashley Farrell: West of the Shinnecock Canal continues to have less inventory available than our counterparts to the east. Therefore, there are fewer deals to be had in the western villages. However, it seems the $3 million, even up to $4 million, price point is quite active. Of course, the sub-$1 million range (if you can find it!) is always the most competitive.
Cindy Scholz: Sag Harbor waterfront and Amagansett South are highly desirable. Sag Harbor is a true boating community, and the year-round appeal of the town is captivating. Amagansett South allows you the best value given the proximity to the ocean, and there is a booming community in the Lanes and Dunes.
Todd Bourgard: The $1.5 million to $3 million price point remains quite active. Contracts are signed within minimal days on the market, frequently with several offers. We are seeing strong activity in Sag Harbor, Westhampton Beach, Springs and Hampton Bays.
John Wines: While the Hamptons real estate market overall has experienced a relative weakness compared to previous years, there are definite pockets of strength in certain categories. In particular, the demand for turn-key homes as well as high-quality properties under $2 million continues to be rather robust. These specific segments are bucking the overall trend out here due to limited inventory and resilient demand.
Simon Harrison: Sag Harbor, North Haven and Noyac have the strongest appeal, largely because of the year-round hub of activity around the boating that supports more year-round restaurants and shopping. Sag Harbor used to be offered at greater values in comparison to the Hamptons, but we can’t keep the $1 million to $2 million houses on the books for long.
Marilyn Clark: Confidence in our market remains high. There are many price points that would be much more active if there was more inventory; there is high demand across all price points and in all the villages.
Kalen Raynor: There are always areas that are more in demand, but overall all towns in the Hamptons are still seeing high demand.
The number of sales in the fourth quarter of 2022 was down by roughly half. Is that a sign of what’s to come in 2023?
Judi Desiderio: No. I believe that demonstrated the bottom, provided nothing catastrophic occurs.
Ashley Farrell: Yes, sales for Q4 in the Hamptons were down significantly from the year before, but this was partially due to the Suffolk County hack and subsequent ransom situation. Real estate closings were halted for weeks, since clear title could not be verified. So, the statement that overall sales were down by “roughly half” was also based on outside factors, which have been resolved, rather than strictly due to market conditions. I wouldn’t read too much into this. While the “COVID boom” has likely ended for good, rest assured our region remains a highly desirable destination for buyers.
Cindy Scholz: We are entering a “foggy” market — difficult to predict. For quality inventory, we anticipate high demand and downward pressure on inventory.
Todd Bourgard: The reduced number of sales is a direct result of low inventory. As our inventory increases as we enter the spring and summer market, so will the number of transactions. As aforementioned, there is no lack of excited buyers.
Tim O’Connor: The drop in sales is only the result of the lack of inventory to sell and should not be considered an alarm of a downturn with interested buyers. When a home comes to market and is priced correctly, it moves quickly, sometimes with multiple offers.
John Wines: At the end of 2022, we saw the confluence of several unique events impact the sale of homes on the East End. The Federal Reserve raised fed fund rates at a rapid pace, leading to the largest single-year interest rate increase in history and contributing to a more general economic uncertainty. At the same time, Wall Street was simultaneously battered with both bonds and stocks slipping significantly. In fact, the S&P 500 experienced a reversal last year that equates to roughly $8.2 trillion in losses. Investors had few safe havens to weather the economic storm. This all had a very direct and meaningful impact on Hamptons real estate and left many feeling rather glum about the prospects for 2023; however, there is actually a great deal of reason for optimism. Interest rates have ticked down of late, the equities market came roaring back in January, inflation has cooled in recent months, and the labor market remains strong. If these different trends continue, the pace of sales should steady at a more healthy and sustainable level.
Simon Harrison: We have not seen prices dropping, and the temptation is to follow that with “yet,” but if inventory doesn’t come in, we will have less unit sales, less volume — not lower prices.
Marilyn Clark: Sales were down by half because we ran out of houses to sell. Hopefully, we will see more houses hit the market in 2023, but if the trend continues, there isn’t much we can do to bolster those numbers.
Kalen Raynor: I believe the market shifting that began in August has brought us back to what is now a normal market. Although sales were down in general due to this, 2022 sales were still very strong in the Hamptons. If you go back to pre-COVID times, the market is in line or even above that time.
How is the 2023 rental market shaping up?
Judi Desiderio: Big.
Ashley Farrell: It’s a good time to be a tenant on the East End. During COVID, many new homeowners emerged in the Hamptons market. The pandemic years allowed these buyers to enjoy their new purchases — often “full time.” However, now that Manhattan, the job market, and the rest of the world are returning to center, those new owners no longer have the flexibility to use their properties like once before. For this reason, the rental market is saturated with available options. Currently, many tenants are searching for their next summer digs. While deals are happening, landlords must be realistic — and willing to negotiate — if they wish to rent their home.
Cindy Scholz: Q1 has been busy for rentals and many landlords are achieving 2022 pricing for A+ locations. Areas with dense rental inventory, such as East Hampton North, are seeing a softening in prices due to the larger amount of inventory unless the house stands out.
Todd Bourgard: It is shaping up to be a strong rental season. We are ahead of last year’s rental demands and are meeting them quite nicely.
Tim O’Connor: The rental market is surprisingly strong, with most leases being signed for a specific month during the summer. There are not many full-season renters in the marketplace. Renters are not planning to stay out east for the entire season, and many are trying part of the season.
John Wines: So far, the 2023 rental market appears to be shaping up to be more competitive than the last couple of years. The demand for rental properties has waned a bit as the pandemic subsides and more people are able to resume their normal activities such as traveling abroad, etc. Additionally, the Hamptons rental market is offering more high-quality listings than at any point in recent memory. In light of this dynamic, landlords may need to adjust their rental rates to attract potential tenants. In short, the 2023 rental market in our area is proving to be a nuanced landscape, where both landlords and tenants might do well to alter their approach from the past two years if they want to secure the best outcome.
Simon Harrison: Demand for rentals for the summer is healthy, and still forming, so it could be very strong. It’s a different dynamic than existed during the last two pandemic years, but only adjusting back to the traditional summer demand that we all know and love.
Marilyn Clark: There are still many beautiful houses available, but people are actively looking for rentals, and our team has been busy making deals, so it is looking like a good rental year so far.
Kalen Raynor: Although off to a slower start, the rental market has definitely started in the Hamptons. In the past few weeks, I have seen a great increase in the rental market, with many of our company’s listings getting rented. With the increase in the interest rates making purchasing not possible for some buyers, I believe we will see a strong rental market in 2023. I suggest if anyone is looking for a rental to start looking now, as they will have the most inventory to choose from at this time.
Are any of the changes brought by the COVID-19 pandemic here to stay?
Judi Desiderio: Elongated time on the East End by our audience.
Ashley Farrell: Virtual showings were exceptionally rare prepandemic. Business was largely done in person and for the most part, it would’ve been laughable to suggest “sight unseen” deals were possible in the world of real estate. Now, buyers are conscious of their time and homes offering the ability to “pretour” virtually, before a formal, in-person showing, are increasingly appealing. I recently launched a roughly $4 million listing on Quiogue; by day two, 78 people had viewed the YouTube virtual tour. To put this in perspective, I didn’t even have a YouTube channel prepandemic. Now, I’m using it to sell houses.
Cindy Scholz: The Hamptons is now a year-round town for many, it is an easy escape from NYC and where many city dwellers are spending their weekends. The restaurants have been quite busy this winter — it is difficult to get prime-time reservations, which was never the case pre-COVID.
Todd Bourgard: I feel that the professionals in our industry have become much more conscientious of their health and how their illnesses may affect others, particularly upon entering and showing people’s homes, as well as coming into the workplace.
Tim O’Connor: For the rental market, a FaceTime call became the new norm for deciding on a property. This seems to continue in 2023 and beyond. For the buyers, they want move-in ready and not a project. This became evident during COVID and continues on.
John Wines: Generally speaking, the COVID-19 pandemic has resulted in a paradigm shift in the sale of real estate, with a marked increase in digital interactions during the home search process. Virtual tours, property videos, and social media posts are now ubiquitous in the industry, signaling a permanent change in the way consumers search for homes. Taking a more granular look at the impact of the pandemic on the East End, the most obvious change has been the continued presence of residents who are spending more time in the Hamptons and working from home rather than returning full time to their New York City offices and lifestyle. While the full-time exodus from the city to the surrounding areas may not be permanent, the establishment of long-term facilities by institutions such as NYU Langone, Weill Cornell and Greenberg Traurig all signal a shared belief that the Hamptons has become a more year-round destination. The belief in this trend is further reinforced by the increased off-season activity of restaurants and the rise in school enrollments from 2019, indicating a more lasting change in the East End post-pandemic.
Simon Harrison: We had about 120,000 people move out here from NYC, families, jobs and all, and many of them are staying. At quick glance, one-third of those who bought from our firm are still here.
Marilyn Clark: Since the start of the pandemic, there has been a shift in people’s attitudes about homeownership. Besides the obvious joys of owning a home and the solid investment opportunities that we have always experienced, owning a home during the pandemic greatly contributed to people’s feelings of safety and security, and I don’t think that is easily forgotten. Even though some people have moved back full time to the city, others have continued to work from home part time or full time. Many have discovered the wonders of experiencing the Hamptons off season and don’t want to give up the newfound quality of life. I believe those are the reasons why we are seeing so few houses being offered for sale.
Kalen Raynor: COVID-19 made many changes to the real estate market. I think one of the top changes that was brought about due to the pandemic was virtual showings. Having an agent preview a home with a buyer electronically is beneficial for both the buyer and seller. In the height of the pandemic, we did many virtual deals, with many buyers not even seeing a home in person. I think, now, the virtual showing has become an invaluable tool in today’s market and is here to stay.
What’s the biggest challenge agents must overcome in the current market?
Judi Desiderio: The work needed to secure transactions has grown considerably.
Ashley Farrell: Orchestrating a meeting of the minds between buyers and sellers is always a challenge. Many sellers are living in the past and believe their pricing should be that of 2020-21. On the flip side, the news is telling buyers we’re in a recession, the economy is doomed and the bottom has fallen out. So, as agents, we’re left to find a middle ground between the seller squeezing out every cent and the buyer who believes they can score their dream home for pennies on the dollar. It might take a good deal of back-and-forth, but more often than not we get it done!
Cindy Scholz: Inventory and managing expectations. We have what we like to call spreadsheet buyers that will never transact in this market. These buyers are stuck on old comp pricing while ignoring the shift in demand, which is preventing them from participating in the market. Rates are not an issue; the biggest obstacle is finding good inventory.
Todd Bourgard: Media and outside influences can cloud the true state of this hyperlocal market, potentially resulting in sellers and buyers making erroneous decisions. While somewhat challenging, our agents must continuously be the providers of factualness in trends, current market conditions and what is ultimately in their client’s best interest. After all, they are the experts.
Tim O’Connor: To continue to find product in the market to sell, either off-market deals or finding a property to launch for sale. There are so many interested buyers in the market so buyer demand is strong.
John Wines: The current market presents a challenge for real estate agents in effectively balancing the expectations of both buyers and sellers. Despite the recent market fluctuation, many sellers still have elevated price expectations and unreasonable sale timelines. Conversely, buyers out here are often grappling with higher price points than they prefer and general difficulty in identifying the value propositions that meet their own expectations. In either case, the key to overcoming these challenges is a combination of patience and tenacity. As agents, we must educate our clients on the realities of the market and ensure that both sides remain flexible in their approach. Utilizing our effective negotiation techniques and market knowledge, we can help our clients successfully navigate these obstacles and facilitate transactions that meet the objectives of all parties.
Simon Harrison: Agents that entered the business in 2020 to now will appear rudderless, whereas those of us who are seasoned know how to navigate just fine. This is an 80/20 business, and the top 20 percent of us are plenty busy.
Marilyn Clark: The biggest challenge agents have to overcome is working with the imbalance in supply and demand.
Kalen Raynor: I think the biggest change agents will need to overcome is the adjustment they will need to make as far as the pace of the market is concerned. Agents need to be extremely knowledgeable of the current market trends and need to provide their invaluable expertise to their clients.
One fine body…