The East End Roundtable
Any Hamptons real estate professional asked will agree that the South Fork market was off to a shaky start in the first half of 2019, but many now see encouraging signs as asking prices have adjusted to market realities and buyers come out of the woodwork. The Press recently asked local experts to share their insights and expectations, analyze the year so far and share their expectations for the future.
Gary DePersia: Optimistic. This is the first time since I started in 1995 that so many properties are still available when the stock market has been up, money is still relatively cheap and prices are down or very negotiable. Yet this is sure to change. With these three factors in play, you’re going to see a lot people on the sidelines stepping up to buy. There are a lot of great properties out there and things are going to start heating up as people realize there are great deals from the entry level to the higher echelons. The great properties are going to get snapped up. We are seeing it already.
Judi A. Desiderio: Thankfully, gaining momentum from a quiet first half of the year.
Aimee Fitzpatrick Martin: After a sleepy second quarter, it feels like the third quarter is seeing increased activity and deal origination, certainly at Saunders. I have a few deals in contract or heading into contract. Savvy sellers are adjusting their asking prices to reflect current market conditions, which means properties that have been on the market for extended periods are finding buyers. I’m feeling cautiously optimistic as we head into the fourth quarter, but no one has a crystal ball in real estate.
Ann-Marie Horan: Perplexed by the quiet, given the health of the stock market. In my experience, 20 years, historically there has been a direct correlation.
Todd Bourgard: It’s positive and upbeat.
Geoff Gifkins: The sky is not falling so don’t expect a 50-cents-on-the-dollar sale anytime soon; the real estate market in the Hamptons is just cyclical like any other. In the last two months, three very notable transactions in excess of $30 million have occurred, and general listing activity in terms of inquiries and showings have increased. We are still in a buyers’ market.
Pat Petrillo: The market is very active, which is typical of this time of year. There is always a big push in August by buyers and sellers to get the deal done. That attitude generally continues through the fall. The wonderful area we live in is fresh in everyone’s mind, and buyers want to continue to be a part of it.
Jennifer Friedberg: It’s a buyers’ market and sellers are starting to accept the realities of the new marketplace. That said, inventory is up and buyers are even more price sensitive, spending longer looking and kicking tires. However, now at the end of the summer (normally a quiet time) deals are certainly happening. It is noticeable that showings have suddenly increased and more properties are going into contract. Sellers with a good product who price correctly are in the best position to take advantage of this uptick in the market.
Gary DePersia: We don’t have empirical data, as far as I know, but anything that affects a buyer’s tax bite will have some effect on their willingness to spend money on a second home. That said, I have not heard one buyer mention it while showing houses.
Judi A. Desiderio: Depending on the price point, the impact varies — but for all it is just another horse pill to swallow.
Aimee Fitzpatrick Martin: It’s true that the new $10,000 SALT cap has made it more expensive for homeowners to own luxury property on the East End. However, for years I’ve heard buyers ask, “What are the taxes?” It’s obviously a factor in purchasing a house. I sell a lot of homes in Quogue Village, which has some of the lowest taxes you’ll find on Long Island. I recently sold a house on an acre with pool and tennis and the town and village taxes combined were only $5,500. Buyers coming from the Gold Coast in Nassau County and Westchester (where the taxes are insanely high) shake their heads and can’t believe how low the taxes are. That certainly makes Quogue and other “west of the canal” communities more enticing.
Ann-Marie Horan: I think its part of the trifecta: That, plus eight years of price appreciation, coupled by 750,000 lost jobs on Wall Street over the last 10 years.
Geoff Gifkins: Buyers and sellers alike have to adjust to the market we are in now. These changes do have some impact; however, they are factored into the informed decision-making process, including the other tax benefits accrued this year.
Pat Petrillo: I think initially buyers hold off making any decisions on a new purchase whenever there is a new law affecting real estate. After a wait-and-see lag time, it’s generally business as usual, as it is now
Jennifer Friedberg: The East End real estate market has been impacted by the SALT deduction. Although our taxes are low, our “feeder markets” got hit hard, limiting individuals’ extra money to buy a secondary home in the Hamptons. Also, with the performance of the stock market at an all-time high, people are slower to take out money from the market and are much more analytical, applying stricter scrutiny when buying a home.
Gary DePersia: It’s made it far more difficult to service our clients. The system it replaced was far more broker friendly.
Aimee Fitzpatrick Martin: Zillow launched Out East before it was ready for prime time and it does not feature the functionality brokers need. The majority of brokers I know consider it a disaster. The only good news is that it has brought together East End brokerages who are determined to combat these challenges. Hamptons brokers are a tough, creative bunch. We find ways to get things done.
Ann-Marie Horan: They have replaced our system with a system that is operating at 5 percent functionality of our former system, all while proclaiming it as an updated and improved platform. It is horrendous. What used to take two hours now takes four days. Disgraceful!
Geoff Gifkins: Out East is a consumer portal, it is not a listing portal for brokers and agents. The functionality and interface of Out East put tremendous pressure on agents to get key listings and relevant information to their clients and customers. All agents had to work off of three systems to collect the same data that was readily available on the old HREO broker portal RealNet. We also had a universal co-broker agreement with all agencies during this time; however, lately, this is sadly no longer the case. Some brokers are choosing not to share listing data with others, putting their sellers and agents at a great disadvantage in this tough market. Zillow’s recent push into the real estate selling market will definitely affect the consumers’ perception of this company’s role as an impartial real estate information provider; the conflict of interest is just too obvious, and I don’t think this move will save the company from its financial problems.
Pat Petrillo: It’s made it much more difficult for brokers who are used to a comprehensive, fact-filled database to get the information they need to service a buyer and or seller in a timely professional manner and to keep buyer and seller information confidential.
Jennifer Friedberg: The new system has been challenging as most agents have worked on the HREO platform for years, and the functionality of the Out East system has been evolving on a regular basis. Additionally, given that the system was launched April 2nd, fundamentally at the prime time for Hamptons season, agents, buyers and sellers have been frustrated. That said, it has been a painful transition yet we have adapted.
Gary DePersia: I don’t believe we have gotten to that point. Go to any other resort or second-home market and you will see many more condo developments as options for homebuyers. With an aging boomer population, having more leisure time but still wanting to downsize, and at the same time find a turnkey situation to own in the Hamptons, I can see many more intelligently planned and built condo developments coming online. Some people will buy for their own use while others will use for rental/investment purposes or a combination of both. These new developments will ultimately replace the aging inventory built years ago that offers low ceilings, dated amenities and antiquated floor plans. And how about the rise of fractional ownership like I see in Aspen with the Dancing Bear, Residences at Little Nell and the new W coming online later this year? We haven’t even seen that scenario hit its stride out here.
Judi A. Desiderio: Always has! But possibly now with 10,000 baby boomers retiring every day, there will be more demand.
Todd Bourgard: Easy, maintenance-free living is in demand. A growing segment of today’s Hamptons buyers are more interested in luxurious living that is convenient to their resources and schedules. Luxury condos fit the bill perfectly.
Geoff Gifkins: Like all real estate, it comes down to location, price, and amenities. Interest is still there with many buyers looking for carefree living. In the Hamptons, land with the permitted use for these projects is very limited.
Pat Petrillo: I think there is a demand still for luxury condos.
Jennifer Friedberg: Not for me. There is more demand than supply of choice product for condo living as people are downsizing and/or do not want to undertake the hassle and expense of maintaining a property.
Gary DePersia: Anything that makes ownership more financially feasible for a buyer will be a boon to second-home ownership.
Judi A. Desiderio: Not much.
Aimee Fitzpatrick Martin: Absolutely. My go-to mortgage expert, Pat Campbell from Valley National Bank, tells me his phone is now ringing off the hook. With interest rates dropping, first-time homebuyers have more purchasing power, especially in the $400,000 to $500,000 range; on the higher end, cash buyers have more incentive to finance their purchase since money is cheap to borrow; and some homeowners will consider refinancing since the average 30-year fixed mortgage is down to 3.75 percent. Since real estate is the No. 1 business in the Hamptons, even a slight uptick in the mortgage industry will mean more business for real estate brokers, appraisers, real estate attorneys, title closers, etc.
Ann-Marie Horan: I doubt it.
Todd Bourgard: Of course. Historically low interest rates affect every market in one way or another. Buyer confidence always creates a good buzz.
Geoff Gifkins: This will encourage buyers seeking financing, but at the end of the day buyers still focus on where they want to live and the amenities that property offers.
Pat Petrillo: We have never seen a lot of transactions where financing is a condition of sale. So while I think buyers are very interested in interest rates from other business points of view, I don’t think our sales market is affected at this time.
Jennifer Friedberg: We do not anticipate that lowering interest rates by a quarter-point will spur buying as the Hamptons market is less dependent on mortgages in general.
Gary DePersia: If you want to sell, it can be done but you must be patient and aligned with the right broker. If you want to buy, it’s always a good time. The wisdom is to not try to time the market. Just do it.
Judi A. Desiderio: Buyer — hands down! There are huge bargains in most price categories and locations other than entry-level price points.
Aimee Fitzpatrick Martin: To my eye, it feels like the scale has tipped a bit in favor of buyers. There are many good real estate opportunities out there, especially west of the canal. This is not the time for a seller to “test the waters” on pricing. If sellers truly want their house to sell and not have it sit on the market, they have to price their home accordingly. Realistic sellers are selling their homes.
Ann-Marie Horan: Buyer
Geoff Gifkins: Depending on your mindset, this market is actually good for both. Buyers get the benefit of a good range of inventory and little buying competition. Sellers who truly want to sell can meet the market as it exists today and will sell their property. Both buyers and sellers need to stay current with the market. Getting the best deal is not always in the best interest of the buyer, as they will live in these properties and at some point have to resell. Sellers should not discount any offer, and they should engage and negotiate. Zero response is offensive to buyers, and they will move on to the next property. Sellers need to make sure their listing is visible to all agents — you never know where your buyer will come from. If your exclusive broker is not sharing your listing and making it available to all agents, you, as a seller, are being put at a serious disadvantage in this market.
Pat Petrillo: I think generally, excepting a few select properties, it has been a buyers’ market for the past months. But as I mentioned earlier, activity has really picked up and there seems to be, for more than a few properties, several interested buyers. If that activity continues and more houses sell, as I think might happen, then everything changes.
Jennifer Friedberg: It’s a buyers’ market with inventory up and sellers getting much more realistic about pricing, so it’s a prime opportunity for buyers to get in there and get deals done. For sellers, pricing is key to moving inventory.
Gary DePersia: I have always believed that pricing a property properly from the outset, based on available and recently sold comps, gives the best opportunity to sell a property in a more timely manner. The only exception could be when a unique property, location or a set of circumstances doesn’t lend itself easily to the normal comp scenario. Here you may need to test the market to flush out buyers who may have been waiting for such a unique situation. Yet even so, you cannot put it at a price that deters brokers from showing it or buyers from considering it.
Judi A. Desiderio: This is dictated by the market trajectory — if the market is on an ascend then, yes, it may take longer, but a higher selling price will prevail. But if the market is flat or deflating then an overpriced property will simply sit there for years — which is not advisable.
Aimee Fitzpatrick Martin: I don’t think so. The longer a home sits on the market, buyers start to think it’s overpriced or there’s something wrong with it. A common buyer question is, “Why has this house been on the market for so long?” If a home isn’t getting showings — and, most importantly, offers — it’s time to revisit current pricing. I often suggest to a seller that they get a home appraisal before putting their home on the market.
Ann-Marie Horan: It is unwise in this market. Better to position yourself as the best offering in your segment.
Todd Bourgard: Quite the contrary. Typically, when a seller prices a home at market value, they will get close to or go over the asking price. Overpricing equals more days on the market and usually results in a lower sale price. Time is money: Sellers need to factor in the carrying costs versus list price with a more expedient exit.
Geoff Gifkins: In a sellers’ market that may be true, but we are in a buyers’ market, and inventory is high compared to the available buyers. Therefore, competition is high; sellers really need to know the market and price to suit the market today if they really want to sell. In this second-home market, the urgency to sell is not as prevalent as it is in a primary-home market. Across the U.S. we are seeing a tremendous growth of iBuyer platforms such as Open Door and Zillow Offers, where these companies will make offers on properties to close very fast. When you read the fine print, you find that they make offers based on their market assessment, the repairs needed, and the state of the market, this may not be in your best interest. Always consult a local broker for an independent assessment or get an appraisal for your own peace of mind.
Pat Petrillo: Real estate is not an exact science so there is no right or wrong. I have seen sellers eventually sell at a good price when their home is ambitiously priced when first listed. But is that a function of time spent on the market and ever-increasing prices? It’s hard for a seller to think he might leave money on the table, and I get that, but generally, when a property is priced competitively it sells at a better price and quicker than if ambitiously priced and lingering on the market.
Jennifer Friedberg: No, they do not get a higher final sales price if they ask more than market value. If anything, they often get less than if they had priced correctly to begin with. The better a price from the get-go, the better chance a seller will secure the highest sales price. If not, constant price reductions and days on market hurt the final sales price.
Gary DePersia: There is no one amenity that helps sell a home. It is always a combination of amenities, floor plan, quality, location and price that drives the sale. The only thing I regularly recommend to sellers is to do those cosmetic repairs that they would do if they were staying. Remove any glaring problems a buyer might focus on whether that be inside the house, its exterior or landscaping. And in all situations home decluttering goes a long way to help a buyer focus on the house and its potential. Hamptons home buyers probably have enough clutter in their everyday home. They don’t need to find it in a home they are buying for their leisure time.
Judi A. Desiderio: Expand the outdoor living space — everyone loves an outdoor living room with fireplace and TV and a tricked-out outdoor kitchen with dining area. This can increase the enjoyment as well as the usable square footage for any home. If that’s not in the budget then a fresh coat of white paint throughout and a purge of all clutter.
Aimee Fitzpatrick Martin: Sellers often ask, “Should I redo my kitchen or bathroom before putting it on the market?” I tell them not to because even if they update those areas of the house, their choices of colors and materials may not appeal to a buyer. One safe choice is to remove carpets and install wood floors. Nine times out of 10, I find buyers don’t like carpeting and want wood floors. That investment will be recouped in terms of the price a buyer offers for your house.
Ann-Marie Horan: Certainly, staging makes a huge difference. Decorating is wildly important.
Todd Bourgard: I always say the kitchen sells the house. It’s the center, or the heart, of the home. It’s a place where friends and family gather and memories are made. There is nothing like breaking bread together.
Geoff Gifkins: New kitchens and bathrooms definitely make an impact. However, they need to consider that buyers may ultimately want to do something different. Preparing the house to sell is more important: decluttering, taking care of minor repairs, simply making sure the house is clean and shows well. Getting a home inspection done to prepare for the sale is also recommended, as is ensuring that all the structures on the property have current certificates of occupancy.
Pat Petrillo: Well there are a couple of things that are very important for a seller to do to get top dollar, but if we are talking just amenities I would have to say a pool. This is a luxury vacation area where one can escape the trials of city life. A pool is visually appealing and adds to the feeling of luxury, relaxation and tremendous enjoyment for adults and children — and sometimes the dog.
Jennifer Friedberg: That’s a hard question and I do not believe there is a universal answer. Amenities correlate to the sales price. A pool and/or room for a pool is a must and is clearly supported by the search analytical data. Homes with beautiful kitchens sell faster than average homes. Rather than a complete renovation, look at areas where sensible changes and freshening up can be made — appliances, hardware, backsplash, cabinet color — simple and affordable. Other areas that come into play but are not amenities are: curb appeal, decluttering, depersonalizing, painting and staging.
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