The Hamptons has always been synonymous with prestige and timeless elegance, but there’s another reason why you should
buy now – prices plummeted in Q4 of 2016, according to three different reports.
Current market conditions are favorable for those looking to buy a South of Highway home for $3.5 million or less.
The median sales price of homes in the area fell 7.2% compared to the previous year, while the number of closed sales decreased by almost 15%. Moreover, sales took four days longer to close.
Home prices dropped 23.1% year-over-year, to 1.87 million, while the median sales price for the Hamptons’ luxury real estate market decreased by 29.5% year-on-year to $5.85 million.
Luxury home sales, which cover homes listed for $4.05 million and more, tumbled 30% to just 25 deals in Q1 of 2017. At the higher end of the market, the number of sales worth $10 million or more dropped to 9 from 13 the previous year.
This comes after the housing market reached an 11-year high in 2015. The average sales price of a home in the enclave had been $3.28 million, indicating a year-over-year increase of 15.6%.
The slump in housing activity in late 2016 has been attributed to uncertainty over the presidential elections in November. However, consumer confidence returned after the outcome of the polls became clear, which could potentially reenergize the market this year.
Local real estate has long been linked to Wall Street and hedge-fund performance. The Hamptons’ seaside communities are filled with coveted vacation homes that appeal to Wall Street professionals.
However, hedge funds suffered a dismal year in 2015 and experienced a steep decline in January of 2016, the lowest since the aftermath of the financial crisis in 2009.
In Q1 of the same year, the market took a blow from China’s economic slowdown and weak oil prices that gave the S&P 500 its slowest start since 2009.
Hefty Wall Street bonuses, which fund the majority of high-end home purchases in the Hamptons, have also taken a beating, decreasing by 9% in 2015.
Massive lay-offs in the banking sector also played a role in the slump in housing activity. Financial firm Morgan Stanley, for one, cut over 1,440 positions in Q1 of 2016 in order to cut costs.
Despite the dip in property prices, however, the supply of homes in the Hamptons is being revitalized. Developers are replacing many of the neighborhood’s older homes with much larger ones. These new homes often have higher ceilings and more natural light, along with sought-after amenities like pools, outdoor lounges, tennis courts, and rooftop gardens.
This is partly due to vacant land and farms being preserved as open spaces, and the fact that the area’s beachfront lots have been built out. Developers have resorted to purchasing existing homes, only to have them torn down in order to build new ones.
Another reason is that most buyers don’t want to renovate older houses, preferring new construction homes with modern features.
The base of buyers is also changing. Homeowners in the area have traditionally been city dwellers who buy vacation homes where they can relax for a few days or spend weekends and summers in before returning to the daily grind in New York City. As mentioned earlier, these buyers typically hold jobs in Wall Street.
However, more international buyers are showing interest in the Hamptons, perceiving it to be a great location to park their capital. There have also been an increasing number of buyers from the tech industry.
Are you ready to buy your own home in the Hamptons? Call Denise Kerrigan Perfido at 631-288-9600 or send an email to dee@kerriganrealty.com.