The dreary news of interest hikes and our regions’ lack of inventory has many nervous moving into 2023. Our question is “does the doom and gloom news affect the luxury real estate market in the Hamptons? What are your predictions?”
Our local real estate rock stars didn’t disappoint.
JAMES KEOGH, THE ATLANTIC TEAM AT DOUGLAS ELLIMAN
I believe we will continue to see increases in the interest rates for the first half of 2023. Unless inflation is tamed or the effects of a recession take hold. However just like 2009 our market will be insulated from major impact. Our luxury market is not dependent on mortgages like many other markets. Also we have three major factors holding up prices. The floor in the market by way of the Community Preservation Fund (CPF), which is more flush with cash than ever before. The second is a lack of inventory. The Hamptons is now “year round” and many people are reliant on their Hamptons home like never before. Finally, rentals often go up as home sales slowdown. Homeowners in the Hamptons (like 2009) can rent their homes as a fall back plan and hold instead of selling and driving numbers lower. I believe these factors will allow for a “soft landing” in our luxury market in 2023.
SUSAN BREITENBACH, THE CORCORAN GROUP
In all the 30 years I have consistently been a top broker in the Hamptons, our real estate market has always set itself apart from most of the country. 2023 I think will be a good time to buy and the market will be stable. Although there are some fluctuation and quiet times, especially after 9/11 and 2008 stock market crash, it always bounces back and has never been totally effected by interest rates. Our real estate market doesn’t typically follow national trends. Some buyers do finance and get mortgages but most choose to pay cash. Our buyers are extremely smart and savvy, and do not want to overpay no matter how much money they have.
JACKIE LOWEY, SAUNDERS & ASSOCIATES
Nobody’s crystal ball is perfect right now. To paraphrase Mark Twain, “the reports of the death of the real estate market are greatly exaggerated.” I put together two deals and closed two deals the week before Christmas. The market continues to hum along, albeit not at the frenzied pace we saw during the height of the pandemic. There is a real dearth of inventory and a considerable disconnect between buyer and seller expectations, which both are drags on the market. Nevertheless, deals are getting done. I don’t see interest rates as being the prime driver in our market. It really comes down to inventory and pricing. Well-priced turnkey homes are still flying off the shelf. There is definitely a slower market for homes which need work.
RICH DEC, THE CORCORAN GROUP
Hamptons real estate continues to be an insulated market driven by second home buyer sales and now a lack of inventory. We’ve seen plenty of cash deals since the pandemic in addition to many buyers who took advantage of amazing mortgage interest rates, ranging between 2-3%. With interest rates now varying from 5-7% depending upon your finances, loan amount and credit score, we’ve seen a shift in our market for sure but historically these rates are not terrible and the mortgage brokers I’ve spoken with feel that we’ll see rates adjust sooner rather than later. There are buyers who are still eager to purchase a Hamptons home, but some prefer waiting for more inventory or until rates come down. Even though new inventory is trickling in, I do think it will take a few years to get back to the pre-pandemic inventory levels. Overall buyer activity has declined however there are still active buyers ready, willing, and able to make a move on homes $1.5M or less. As far as the higher end markets, we’ll probably continue to see some buyer apprehension there until we get a clearer picture of the overall economy. It’s important to keep in mind that real estate is a tangible asset that you can use, rent, or sell and Hamptons real estate has proven itself time after time to be a great investment with substantial appreciation year after year.
SARA GOLDFARB, OFFICIAL PARTNERS
Interest rates will still impact volume of trades but with tight supply, we will continue to see ‘normal’ velocity…. We’re stabilizing. The headlines across the nation will also impact the perception of the market, however, smart buyers will understand that the Hamptons is a micro-market (not macro), and will see the opportunity with sellers willing to negotiate.
RANDI BALL, THE CORCORAN GROUP
Will 2023 be another year of hearing the phrase “lack of inventory” in the luxury market? So far, it looks like inventory will once again be more of an issue in my market than the fluctuations of interest rates. I was involved in mostly cash deals towards the second half of 2022 and I am experiencing the same so far in my 2023 first quarter deals. Hamptons real estate is simply a great financial and lifestyle investment that never disappoints. I am so ready to work hard and continue to please my clients and customers in the New Year ahead.
SUSAN HARRISON, COMPASS
I think we will see a “reset” of expectations as 2023 begins. Many buyers were on hold at the end of 2022 in a wait and see moment. The Fed has already indicated that interest rate hikes will slow down and we are already starting to see inflation tapering off. For cash buyers this is an excellent time to try and negotiate. For the last two years, given the frenetic market state, there was hardly any room for negotiation. Now, with a reset of expectations of both buyer and seller, we will start to see more deals being done.
MARY SLATTERY, THE CORCORAN GROUP
In certain segments of our market, interest rates can certainly affect activity. But overall, due to the uniqueness of the Hamptons and an increasing desire by buyers to own a piece of our paradise, I think we will still see higher pricing and less time on market as we did in the pandemic years. We are still at very low inventory so sellers can capitalize on that and very qualified buyers can and will drive sales.
HAL ZWICK, COMPASS
I am a commercial specialist, and while we still see strong interest in most categories – hospitality, restaurants, commercial/industrial, and retail – we are witnessing a changing marketplace. The bidding wars of the last two years are less, and offering prices are lower based on the rising interest rates. However, our savvy commercial clients see beyond 2023. They are optimistic that the current and coming economic downturn will be short-lived and are confident about a more robust economy in 2024 before the election. They are therefore seeking to expand their portfolios at the current lower price points to be in a position of strength down the road.
JACKIE DUNPHY, THE CORCORAN GROUP
Investors are not going to make the same kind of wild money they did during the pandemic, especially in the financial market. They are going to take any new income and invest it in real estate, which is always the safest bet long-term. As for interest rates – mortgage broker Melissa Cohn of Raveis keeps telling me: you date the rate and marry the house. Buyers do not need to be afraid of committing to the house of their dreams. There are mortgage products out there that carry a relatively low interest rate, and, when rates lower, these can easily be turned into fixed mortgages. In any case, the majority of buyers on the East End do not need a mortgage. The only problem I see is the lack of inventory and I foresee this changing after the first quarter.
