The Sotheby’s International Realty 2021 Luxury Outlook — a publication exploring the priorities of high-net-worth individuals and the forces affecting their buying behavior — found that the appeal of space, safety and the outdoors, coupled with low interest rates, continues to drive homebuying in prime housing markets such as the Hamptons.
The expectation is that suburbs and second-home markets will remain hot in 2021, if not longer, amid the coronavirus pandemic. “From the Slopes to the Shores, Wealth Will Settle Into Seasonal Towns and Secondary Cities for the Long Term,” one headline in the report reads. The report also details the influence of millenials and a greater desire for green homes and wellness amenities such as home gyms, yoga studios and tennis courts.
The report observes that: “Out east, in the Hamptons, the famous beach towns have morphed into year-round communities, while luxury sales have also surged in other affluent parts of Long Island, including the Gold Coast towns of Nassau County’s North Shore. For now, few expect a mass return to New York, even with a vaccine in place; the space and access to nature will remain appealing even after the pandemic ends.”
The report also touts “ultra-prime real estate and other alternative luxury assets” as stable investments over the past decade that may pique investors’ interest during the post-pandemic global economic recovery. “Affluent individuals have invested heavily in new homes during the pandemic,” it states. “Though a residential property may not offer astronomical returns, it can serve as a store of value in crises, and an international portfolio can offer geographical diversification.”
Nanette Hansen, the East Hampton brokerage manager for Sotheby’s International Realty, said last Thursday, February 11, that because the Sotheby’s brand has 1,000 offices in 73 countries, it has the pulse of key luxury markets around the globe. She also noted the brand’s affiliation with Sotheby’s Auction House.
“People who collect luxury real estate are also collecting the same things that we auction at the auction house — classic cars, fine art, fine wines, watches, gems,” Ms. Hansen said. “And luxury means different things to different people, right? For me, it could be a Cartier watch. For you, it could be a Panerai. But at the end of the day, it’s really an experience.”
The experience sought in the last 11 months is space and safety, she said, and the Hamptons is a place where those can be found at many price points.
Ed Reale, the Southampton brokerage manager for Sotheby’s, added that the proximity of the Hamptons to New York City — the largest city in the country — has always been part of the appeal. “There’s privacy, there’s the ocean, there’s large homes with all sorts of amenities, things that you don’t always find everywhere else,” he said. He noted that, since the pandemic began, the ability to get back to New York City when necessary without having to take public transportation or board an airplane adds to the appeal.
When the COVID vaccine is more widely administered and New York City, restaurants have more capacity and entertainment venues are back open, it will be a game-changer, Ms. Hansen said. But, she added, the pandemic has changed how businesses view their office space, and they may allow their employees to work from home indefinitely or have hybrid schedules.
“One of the key takeaways from the Sotheby’s International Realty Luxury Outlook for 2021 is the headline ‘Don’t Count the Big Cities Out,’” Ms. Hansen pointed out. “So I think there will be a return, but it’s probably going to be more of a hybrid sort of model going forward.”
Mr. Reale said that homebuyers, having been through the pandemic so far, are thinking that in the future it could happen again, or something like it may happen. “A lot of buyers are acquiring properties with an eye towards having a refuge or somewhere to be able to go to in the future, and not just in … this particular problem at the moment.”
Many of the amenities that homebuyers are looking for amid the pandemic are readily available in the Hamptons, according to Mr. Reale. The homes were “built to be big in the first place,” with lots of extra rooms that can now be used for offices and education, he said, and they have extra-large kitchens and outdoor spaces. “So it fits the bill without being asked for.”
Ms. Hansen said millennials are finally entering the luxury real estate market and are purchasing at significant price points. “That’s a trend that’s not going away, because they’re just starting to enter the marketplace now in the luxury real estate world. And it’s going to continue in the next couple of years.”
That’s not due to the pandemic.
“We’ve been waiting for the millennials to enter the marketplace, and they finally have,” Ms. Hansen said. “I just think it’s coincidence, that’s my personal opinion, about the pandemic. And they’re not going away, you know. They’re here to stay, and that’s good.”
Despite strong sales, sellers cannot put any price on a residence and expect it to be met.
“We deal with a very sophisticated clientele — most people are in finance,” Mr. Reale noted. “They’re not going to be made fools of. They know value.”
He advised measuring the market based on final sales prices of homes, not listing prices.
“You can’t account for a developer who decides to just to throw a number out there and see what happens,” he said. “That’s not a gauge of our market. What they sell for is a better indicator.”
Despite a number of very pricey properties trading in the Hamptons in 2020, Ms. Hansen pointed out that the lion’s share of activity in the last 11 months has not been at the ultra-high end and the inventory is not depleted.
“It’s never flying off the shelves,” she said of the inventory above $20 million. “So I think that there’s about the same level of inventory that there was pre-pandemic, except for a few notable sales.”
