The number of newly signed real estate contracts on the East End rose 20 percent between July and August, representing the second straight month of growth. At the same time, new listings declined 2 percent from July to August, falling for the third month in a row. Inventory is still historically low — is this still about the mortgage rates? And how do you think the rest of 2023 will play out?
Aleksandrina Penkova, The Corcoran Group
Even though the current market is notably slower compared to the heightened activity seen at the peak of the Covid market, the demand for Hamptons homes remains consistently strong. Many potential buyers have specific criteria in mind regarding location, home type, and price, and they’re patiently awaiting more available properties to enter the market. Hence, we saw heightened activity in the summer season as more potential buyers were spending the summer here, and had a chance to explore the market and take advantage of price negotiability. The average discount off listing price in August on the East End was 10 percent, and the month concluded with the highest number of contracts signed in a two-week period this year. September has shown significant activity thus far. Inventory at all price points moves efficiently when appropriately priced.
Low mortgage rates, which were secured by homeowners over the past few years, are undeniably the main reason contributing to the limited availability of properties. Homes tend to get listed primarily due to significant life events or opportunities for a location upgrade or a newer residence. Interestingly, once people start spending more time out east, they either keep their property or relocate to a different Hamptons hamlet that better suits their preferences. Overall, investing in properties out east continues to be highly attractive.
Dana Trotter, The Agency
Although the inventory in the Hamptons is historically tight, the market remains very active with compelling properties that are priced well and receiving the most interest. Naturally, the lack of inventory is due to the record-setting volume of homes that sold over the last few years. While some buyers may simply be sitting on their pandemic purchase because of the favorable interest rates, home purchases in this market are generally cash. Buyers may finance their properties privately after closing but I still don’t see the interest rate increases as a large factor out here.
Ashley Farrell, The Corcoran Group
While plenty of homeowners may be willing to sell, they’re “stuck” in their current home. If an owner wishes to purchase another property, he or she could be trading in their current 2 to 3 percent interest rate for 7 percent. When you run the numbers, most find they’d be paying more for the “same” (quality, size, amenities, etc.) house. You can’t sell high and buy low in the same market, so homeowners can either sit tight and wait it out or consider selling for top dollar, renting in the interim, while the market cools, and purchasing once rates fall. While I believe we are due for one more rate hike, buyers should rest assured that the market is cyclic, and it is only a matter of time before rates and inventory begin to correct.
Lori Lambert, Town & Country Real Estate
Honestly, I think this will adjust. The inventory should loosen up regardless of the interest rates because some pandemic buyers are re-evaluating how they will use their homes. They are going back to the office. Some people who bought thinking they wouldn’t be returning to the office or that they would absolutely be able to rent if they had to, are taking a second look after last year’s slower rental market.
Justin Agnello, Douglas Elliman
A lot of it has to do with owners locked into a low rate currently. It’s hard for them to let go of what they currently have to try and upgrade and have to pay a higher rate. That being said we are seeing more inventory hit the market since late August into September. It’s a combination of renters who couldn’t rent for the summer of 2023 and owners who need to be back in the office and can’t do the commute back and forth as much. We are also preparing for the market to normalize in 2024 so we are encouraging sellers to list now instead of in spring 2024.
Ann Gegelys, Sotheby’s International Realty
Seasonally, we do experience a spike in market activity during the summer months. The increased volume of residents and visitors puts more eyes on properties, which translates to more sales contracts. While mortgage rates have pushed upward this year, the increase in rates is not likely to have a dramatic effect on our market, as the Hamptons are primarily a secondary home market, where most buyers tend to be cash buyers. For well-heeled Hamptons buyers who prefer to hold cash reserves and finance their purchase, the Fed’s decision to pause rates this past week was welcome news and a boost of confidence about inflation moderating — we will wait and watch as will our clients.
As we head into the final months of 2023, sales activity remains strong, especially for homes that are well-priced and updated. Today’s buyers, more than ever, want turnkey properties, allowing them to enjoy their investment immediately, or to bring their property to the rental market sooner rather than later.
Adam Hofer, Douglas Elliman
Mortgage rates are definitely playing a huge role in the lack of inventory. A majority of homeowners have a rate around 3%, so roughly half of what they would get now, making it very hard for them to want to walk away from what they have at this time, ultimately keeping the inventory tight. On top of that, I do believe that people have really fallen in love with the Hamptons all over again and have committed to spending substantially more time here than they used to, which is also making the inventory cycle less fluid than it had been.
Garett Pike, The Corcoran Group
I’ve found continued growth from August into September as well! The mortgage rates are certainly playing a substantial role in the lack of new inventory, however, I believe the Hamptons is and will continue to adjust to having less annual inventory than in years past. It’s going to take many months, and even years to incrementally build back up the inventory levels. The market should remain transactional throughout the rest of 2023, look for it to slow around the holidays, which is par for the course!
