Number Of South Fork Real Estate Sales Down For Third Consecutive Quarter - 27 East

Real Estate News

Real Estate News / 1394450

Number Of South Fork Real Estate Sales Down For Third Consecutive Quarter

icon 1 Photo

author on Oct 26, 2018

The Hamptons real estate industry was brimming with optimism for the third quarter back in July. Lackluster second-quarter figures were thought to be a result of long transaction periods between buyers and sellers, as they negotiated prices, and the hope was that a spate of closings was going to happen over the course of July, August and September.

But that didn’t happen.

Instead, the number of South Fork home sales slipped by more than 10 percent for the third consecutive quarter year-over-year, according to area brokerages. The third quarter saw the worst decline, with a dip of more than 13 percent compared to the third quarter of 2017.

Homes priced between $1 million and $5 million had been the soft point for the second quarter. Now, both the low-end—homes prices below $1 million—and the high-end—luxury estates above $10 million—have fallen off. This caused the median home sale price for the South Fork to jump about $100,000 to $965,000.

Judi Desiderio, the CEO of Town & Country Real Estate, chalks the third-quarter results up to an unsettled Wall Street.

“There was quite a bit of momentum going into the third quarter,” Ms. Desiderio said. “But then the stock market did some gyrations and geopolitical events happened, and people took a pause.”

Jonathan Miller, the president of real estate appraisal firm Miller Samuel, which compiles quarterly reports for Douglas Elliman Real Estate, said Northeast markets have been depressed by a tax migration. That’s when homeowners in high-tax states, like Connecticut, are relocating to low-tax states, like Florida, to avoid significant tax burdens. Mr. Miller attributed recent tax migration to the new federal tax plan that was put into motion in April, which limited income-tax deductions for state and local taxes.

Carl Benincasa, a Douglas Elliman regional vice president of sales, said the buyer pool for the Hamptons market is largely Manhattan’s luxury homeowners; Manhattan had its own downturn at 11.3 percent fewer sales in the third quarter, year-over-year, of properties more than $5 million. The Long Island market, excluding the Twin Forks, has also seen a steady decline in home sales in recent years.

Mr. Miller said the Hamptons market is bucking the migratory trend seen elsewhere, because the success of the housing market on the South Fork is grounded in second-home owners.

“We never follow national trends,” Ms. Desiderio said. “But we are umbilically connected to Wall Street and run in patterns with Manhattan.”

Looking at the last decade in New York City, Ms. Desiderio speculates that developers overbuilt on the high-end in the Big Apple. Ms. Desiderio contends the South Fork won’t have that problem because it cannot support the same type of density with multi-unit buildings.

But the South Fork is experiencing its own version of the same problem. Inventory in the luxury market is the largest its been in the past decade: 452 compared to previous quarters in the mid-300s, according to the Douglas Elliman report. Mr. Miller attributed the rise to properties that have been pushed onto the market with the hope that there would be a buyer.

“It’s all about sales direction,” Mr. Miller said. “Because when sales slide—whether the rate of growth is slowed or a decline occurs—that leads to higher inventory, and then that leads to changes in pricing, which brings more competition. The whole process take about two years. Pricing is the caboose of the train. A lot has to happen before you can get to lower prices. And we are sort of in the middle of that process now where sales are easing and inventory is rising.”

As for the lower-end, the decline in sales can be attributed to a lack of inventory rather than a lack of buyer interest; as soon as a residence is put on the market, it’s scooped up.

“The slowdown in the sub-$1 million market, which was the engine of this year’s strongest segment of the market, shows that a lot of opportunities have already been taken advantage of in an ever-shrinking market,” Mr. Benincasa said.

Lawrence Ingolia, a global real estate advisor and associate broker at Sotheby’s International Realty, contends these buyers are hesitant because of climbing mortgage interest rates. “I have one client who is bouncing between banks trying to find a low rate, but he’s being offered 3.5 and 4 percent,” he said.

Also, according to Mr. Ingolia, homeowners on the low-end are less motivated to sell now and will wait for a more favorable market.

Mr. Ingolia said this contentious midterm election season hasn’t made buyers or sellers feel much better. During presidential election years, the market tends to dip in the third quarter as the country awaits new leadership. Midterms don’t typically have the same effect.

But the number of sales in the third quarter of 2018 was 17 percent lower than the same quarter during the last midterm election season in 2014, according to Sotheby’s. Sotheby’s also reported an even greater slip in the number of third-quarter sales between 2017 and 2018 than other brokerages reported: from 387 to 318, or 18 percent.

Contrary to third-quarter reports by Brown Harris Stevens and Douglas Elliman, Corcoran Group found that sales activity was up 1 percent on the South Fork. It’s report included 594 sales. “We capture every transaction so that transactions that were made in the second quarter that weren’t included in the second-quarter report are included into the third quarter,” said Ernest Cervi, Corcoran’s East End executive managing director.

The flat sales growth in the Corcoran report still showed people metaphorically sitting on the sidelines due to higher mortgage interest rates and an uncertain global economy, Mr. Cervi said. But he noted that could all blow over after the elections on November 6.

“It is time to take money out of Wall Street and put it in a property in the Hamptons,” he said. “Many homeowners are repositioning their pricing to be very competitive in this market. That signals to the buyers that there is an opportunity for value.”

BHS Executive Managing Director Cia Comnas said she sees a buyers’ market emerging in the Hamptons.

“I think a lot of the activity that was anticipated for the third quarter is really happening now—it got delayed a little bit,” Ms. Comnas said. “We are seeing first-time buyers coming into this market. The millennials are becoming of age, and entering the real estate market en masse. They, as buyers, are seeing price reductions every day, and sellers are getting used to the fact that it’s shifting to a buyers’ market.”

“The fall selling season has always been the most active selling season traditionally out here. Even though there are more people here in the summertime and properties look their best, it’s never really a transactional period because the homeowners are using them for the summer or renting them,” she continued.

As for what’s to come, Ms. Desiderio said she expects the fourth quarter of 2018 to be booming with bargain hunters in the dead of winter. These are people who made it big on Wall Street and know that sellers are looking to make a deal as properties languish on the market.

“That’s because certain segments of the market that were hit, frankly, have some incredible deals, especially if you are looking at the high end. If you bought the land, built the house and did the landscaping and the pool, you couldn’t come in at the price that some of these houses are at,” she said. “There is a lot of real value out there and today’s buyer, no matter what they are buying, they want to be buying value. The bargain hunters are going to be reaping some benefits.”

She’s eyeing south of Montauk Highway in Sagaponack and Bridgehampton, and East Hampton Village, as prime areas with valuable properties up for grabs. Those sales won’t show up until the first and second quarter of 2019 when deals close.

There is also an increased demand for more expensive homes with a better value in Westhampton, East Quogue and Hampton Bays for year-round residences, which offer an easier commute to New York City and the Twin Forks—seen as more bang for the buck.

You May Also Like:

‘Sugar Cube House’ Sells With Last Asking Price Of $12 Million

Designed by renowned architect and interior designer Daniel Romualdez, a Southampton Village residence known as ... 2 Mar 2021 by Staff Writer

Community Preservation Fund Revenue For January Is Up 132 Percent

The Peconic Bay Community Preservation Fund raised $21.07 million across the East End in January 2021, a 132 percent increase compared to January 2020, according to the office of New York State Assemblyman Fred W. Thiele Jr. The January 2021 haul is the second biggest for a single month in the history of the CPF. The record was set in December 2020, when the CPF raked in $21.31 million. Each of the five East End towns maintains its own CPF, which is funded through a 2 percent tax on real estate transactions, so watching CPF revenue totals is one way ... by Staff Writer

Francis Fleetwood-Designed Home In Georgica Sells For $9 Million

A residence by architect Francis Fleetwood in the Georgica section of East Hampton Village recently ... by Staff Writer

State Budget Proposal Would Apply Sales Tax To Vacation Rentals

Governor Andrew Cuomo’s proposed New York State budget calls for subjecting vacation rentals to the same state sales tax that applies to stays in hotels. If the measure is adopted, any rental on the South Fork for a period of fewer than 90 days will be costlier starting September 1. The bill aims to raise additional revenue for the cash-strapped state amid the pandemic and to level the playing field between hotels and vacation rental marketplaces, such as Airbnb and Vrbo. It is expected to raise $10 million in fiscal year 2022, which begins April 1, 2021, and then $18 ... 22 Feb 2021 by Brendan J. OReilly

Sagaponack Estate With Pond Sells For $19.8 Million

An 8-acre oceanfront estate in Sagaponack with a main residence, a carriage house and a ... by Staff Writer

Bayfront Dune Road Contemporary Sells With Last Ask Of $11 Million

After fewer than 60 days on the market, a bayfront Westhampton Beach home with a ... by Staff Writer

Water Mill South Estate Sells For $7.6 Million As Pristine Inventory Is Depleted

A south-of-the-highway Water Mill home sold for $7.63 million after a bidding war drove the ... by Staff Writer

Barons Lane Estate Sells For $38 Million

An oceanfront estate in Southampton Village that went on the market in 2017 for $55 ... 20 Feb 2021 by Staff Writer

Express Sessions: Real Estate Experts Share Views Of Current State Of The Market

A host of industry experts offered insight into the state of the East End real ... 16 Feb 2021 by Bill Sutton

Agency News: Town & Country Welcomes Riemerschmid; Morabito Team Welcomes Gray

Town & Country 
Welcomes RiemerschmidMichael Riemerschmid has joined Town & Country Real Estate’s East Hampton ... by Staff Writer
logo

Welcome to our new website!

To see what’s new, click “Start the Tour” to take a tour.

We welcome your feedback. Please click the
“contact/advertise” link in the menu bar to email us.

Start the Tour
Landscape view not supported
Send this to a friend