As residential real estate contract signings plummeted year-over-year in May in New York City and on the North Fork and the rest of Long Island, the number of home sales that entered into contract in the Hamptons held steady.
Contract signings remaining flat, year to year, wouldn’t normally be cause for celebration for the South Fork real estate market, especially after a weak 2019. However, under the current conditions, the May 2020 results were phenomenal news for the industry locally.
Industry professionals identified a couple of reasons why the Hamptons bucked the trend: There was a scarcity of rentals following the flight from New York City to the East End in the early days of the coronavirus pandemic, and people who work in Manhattan realized how easily they could work remotely.
On the latter note, real estate appraisal firm Miller Samuel Inc. President and CEO Jonathan Miller called it the “Zoom effect.” Mr. Miller, who prepared the contract signings report for Douglas Elliman Real Estate, said the use of video conferencing software to conduct business is contributing to a recalculation of the value of having a second home.
“Zoom became ubiquitous within one or two days of the shutdown in New York,” Mr. Miller said. “I didn’t even know what Zoom was, and then I ended up using it every day.”
Rather than buying a home in the suburbs and taking a daily commute to the city, a house in a second-home market with an infrequent commute has become a viable option.
“Many are looking at second-home markets and saying, ‘Maybe if I only have to come into work every few weeks, or once a week, twice a week, then I can live farther than where I currently live,’” Mr. Miller said.
Second-home markets are usually more at risk than a primary home market in a down economy, he noted. “If your concerned about your job, you’re not going to be thinking about buying a second home,” he said.
But this time around, he doesn’t expect that to be the case. Mr. Miller is anticipating what he called a “co-primary scenario.” Instead of affluent people upgrading to a larger primary home, they may invest in a larger secondary home or buy a secondary home for the first time, and stay there more frequently, he said.
In Manhattan, co-op contract signings fell 80 percent in May, and condo signings fell 82.5 percent. In the Long Island market, exclusive of the East End, single-family home contract signings were down 64.3 percent and condos were down 73.1 percent. The North Fork did not fare as poorly, with a dip of just 24.4 percent.
At the same time, contracts for single-family homes in the Hamptons market was practically unchanged: from 98 in May 2019 to 97 in May 2020. Condo signings were literally unchanged, at five.
Signings for Hamptons single-family homes under $1 million did fall, 40.1 percent, but contract signings for more than $1 million made up the difference, increasing 31.5 percent.
Like everywhere else featured in Elliman’s report, the Hamptons bottomed out in April in terms of contract signings. But unlike everywhere else, things improved greatly in May on the South Fork.
“There are implications here for what a second-home market becomes post-COVID,” Mr. Miller said. He noted that the Hudson Valley, Connecticut and Florida have all had a surge of interest during the pandemic.
Going forward, Mr. Miller expects the sales and new listings that would have happened in the spring will happen in the summer instead.
“It’s two markets on top of one — a summer market and a spring market happening at the same time,” he explained.
People may see that and mistake it for a real estate boom, he warned.
“I’m not suggesting that it will be weak,” he said, “but we’re not really going to know the state of the market until this pent up supply and demand is satiated.”
Todd Bourgard, Douglas Elliman’s senior executive regional manager of sales for the Hamptons, attributed the activity in May largely to buyers who had been looking in the area for some time.
“Many people that had been out here looking for years all of a sudden realized, ‘OK, maybe now it’s a really good idea for me to come on out here and have a home.’ And everybody that was on the fence, they got off the fence,” he said. “Many of the people that are out here purchasing had been out here before and had rented out here before. Not all of them, but many.”
At the same time, rentals were scarce.
“Lack of inventory on the rental side motivated people who were thinking about buying anyway to buy,” Mr. Bourgard said.
And, he said, Douglas Elliman had some inquiries from clients who began renting a house in March, April or May and then wanted to know if the house they were staying in was also for sale.
Realizing in the last three months how productive they can be while working from home was another motivating factor, according to Mr. Bourgard. In fact, a home office, or at least space to add one, is now a popular specific buyer request, he reported.
Mr. Bourgard said some buyers are purchasing a house with an eye toward possibly selling it in one or two years, when it has appreciated in value. “It’s always been a very good investment to buy in the Hamptons, and that holds true right now,” he said.
Between late March and June 10, in-person real estate showings with both buyer and agent present were prohibited in New York State, posing a challenge for homesellers. However, homeowners could allow potential buyers to visit.
“What we had to do was have the buyer get in touch with the homeowner to make arrangements to get into the house,” Mr. Bourgard said, and then the buyer could bring an offer back to the agent, who could present it to the seller. “We really mastered the rules and the regulations that were put in place by the governor.”
Still, many homeowners did not want anybody in their house, he said, but at this point they are much more willing to have people come to their homes.
New listings of single-family homes in the Hamptons more than doubled in May, from 60 that month in 2019 to 134.
