INSIGHT INTO THE $10M+ HAMPTONS REAL ESTATE MARKET
This year, New Yorkers have moved out East at higher rates than ever. As a result, the Hamptons real estate market has exploded. Our research team took an in-depth look at Q1 and Q2 property sales, revealing everything you should know about the market this year.
JBialsky Premiere Design and Development, Bridgehampton, NY Residence.
Courtesy Bespoke Luxury Marketing
Like all things this year, the boom in the Hamptons real estate market has been unprecedented. Back in March, as New York City led the country in coronavirus cases, local restaurants and retailers were closed or functioning at limited capacity, and summer travel plans were canceled, droves of New Yorkers traded gritty urban quarantining for spacious residences out East. As a result, there was a surge in the Hamptons property sales and rental markets in Q1 and Q2, consistent with the pattern of other destination home markets like Aspen and South Florida. Those who were considering investing in a new secondary home before the pandemic found hardly a better time to do it than this year, leading to a flourishing market and fast absorption of property.
And even before the pandemic, there was not exactly a plethora of available ultra-luxury listings. The fourth quarter of 2019 saw record-breaking numbers in home sales, all while the number of new developments were falling steadily. In fact, in the past five years, compared to 2010-2015, there has been signifcantly less new development in the $10 million+ segment, because land and construction costs have increased while buyers have become more critical and informed. Margins for developers have become thinner, meaning fewer $10 million+ homes being built.
By June 30, 2020, there were already more $30M+ homes sold than in the entirety of 2019.
This low supply, coupled with the rush of New Yorkers to the Hamptons, has led to a price surge and a near depletion of quality inventory across all hamlets, vintages, and price segments. At the end of Q2 2020, the total number of trades in the $10 million+ segment increased by 90% compared to the first half of 2019. The total sales volume increased from that of $359,044,000 in 2019 Q1/Q2 to $737,478,416 in 2020. By June 30, there were already more $30M+ homes sold than in the entirety of 2019.
“It’s important not to look at the market from a one-dimensional point of view,” says Cody Vichinsky, co-founder of Bespoke. “How many buyers missed great opportunities because they didn't believe that all the best properties were being absorbed until it was too late? People often overlook the fundamentals of these types of markets, and assume that they will broadly correct themselves. However, there is typically more demand than good supply, thus the better opportunities are always singular and acute in nature. If you wait for the broad brush market correction, you may be waiting a very long time.”
“There are roughly 295 physical oceanfront properties available, so there are really two or three oceanfront homes at any given time that someone would look at and think, ‘That’s a quality property. That’s a market I want to participate in.’ With the surge in demand, we’ve seen fast absorption and therefore more sales so far this year than in the same time last year.”
With many residents planning to stay in the Hamptons past Labor Day this year, it is likely that the Q3/Q4 sales jump that is typical of every year will surge even further this year. School enrollment has risen out East, and city-based Avenues school is even shifting operations to the Hamptons to accommodate. Those renting will likely either pay premiums to extend their rental or invest in a home of their own, while those looking to buy will likely respond to the high demand and close quickly.
After all, homes in the $10 million+ range are “vessels for experience more than they are homes,” says Vichinsky. “The reason to park your money in a property like this is so you can use it, enjoy it, your family can have a great summer there, and your time is well spent.” In a year of uncertainty, nothing could be better.