Anyone who was waiting in 2023 for Hamptons home prices to fall was disappointed. The low inventory of houses for sale bolstered sales prices, even as the total number of sales slipped. Heading into 2024, there is promise on the horizon for more sales, namely interest rate cuts in the forecast at the same time that the stock market is at an all-time high and unemployment holds below 4 percent. To share their take on the year that was and offer their outlook on 2024, Hamptons real estate professionals join the East End Roundtable.
What challenges did the Hamptons real estate market face in 2023?
Judi Desiderio: The number one is inventory in nearly all markets.
Simon Harrison: In the pandemic years many people sped up their plans, buoyed by historically low interest rates, so we managed a brisk migratory pattern and prices soared. Apart from the expected cool down of that robust market in 2023, the Fed unleashed a torrent of interest rate increases, specifically to slow down the pace of housing price surges. This was intentional, and it worked somewhat, yet there were unintended consequences. Combined with the phenomenon of short-term rental demand spiking in this same period, year-round rentals and affordable housing stock effectively disappeared. This will continue to be challenging.
Mala Sander: It certainly was a challenging year! As life got back to normal post-COVID, “work from home” eased back into “get back to the office,” and people started traveling again. So rental demand was remarkably soft. On the sales side, inventory continued at all-time lows throughout, and the Fed’s push to stem inflation by increasing interest rates caused some buyers to take pause, while they waited for the “storm” to pass.
Dana Trotter: Inventory at certain price points has been one of the biggest challenges we have faced in the last year. There are still eager buyers and motivated sellers, but the lack of inventory and higher interest rates leaves some buyers (and sellers) in a holding pattern.
Terry Cohen: We had (and still have) an incredibly tight market — very difficult to find product across all categories.
Lauren Battista: As we know there were quite a few challenges: inflation, higher interest rates and record low inventory. I think that the continued lack of inventory had the biggest impact on our market. The end of the year reports show that the number of sales (1,522 closings) were down 25 percent over 2022, and the lowest year-end figure in 10 years. Even with the sharp decline in transactions, the total dollar volume ($4.7 billion) is the fourth-highest number in history. We know that is a result of the steady rise in prices over the last few years.
Nicole Tunick: In 2023 we still struggled with lack of quality inventory. This, coupled with interest rates surging to 7.78 percent in January, created a “double whammy” effect and both scared off buyers and made buying a home less affordable.
Jean Curreri: For one the interest rates and high prices of homes were two of the biggest challenges of 2023. Buyers put their homebuying on hold, sellers did not want to list and inflation played a big part as well.
Jack Pearson: The challenges were many, requiring navigation because of distracting world events and interest rate levels. The CeeJackTeam gained market share in a downturn year such as 2023 by focusing on our clients with personal touch and providing exceptional service, as well as representing properties with good value and uniqueness which resulted in transactions.
Aimee Fitzpatrick Martin: There’s no doubt that 2023 was one of the most challenging years for real estate, defined by low inventory, higher interest rates, a volatile stock market, continued recession fears, and global instability. Sellers effectively went on “strike.” If they didn’t need to sell their home due to financial or life circumstances, they were staying put. Why give up a once-in-a-lifetime 3 percent mortgage for a higher one in the 7s or 8s? While there were many qualified buyers actively looking in 2023, most were waiting for a significant market correction. That never happened. Low inventory kept prices from dropping significantly. The sky didn’t fall. The reality is that while transactions and dollar volume were down last year, again due to the inventory shortage, the median price in the Hamptons increased by 7 percent. Real estate in the Hamptons is always a good investment.
Harald Grant: The challenge was getting listings; COVID had taken over all the listings. A lot of the product that we had on the market sold and now people were comfortable living in those homes and there was no reason to sell. Due to remote work, homeowners were using their part-time residences as full-time residences. The big challenge was getting inventory to grow. Even some of the long-time rentals sold.
Are final sales prices poised to move, in one direction or the other, in 2024?
Judi Desiderio: My reports speak to 12 different markets and all different price ranges so the answer would differ in some but the broad stroke is holding trending to uptick.
Simon Harrison: I don’t believe so. Changing the interest rate environment certainly crimped transaction velocity, but those holding low interest rates are not incentivized to sell. Being stuck with a low interest rate is a nice problem to have. This slowed new inventory coming into the market, which kept pricing elevated last fall. We are buoyed a bit by some new inventory and much more activity, and interest rates are expected to soften further this year, bringing even more buyers back into the market.
Mala Sander: In the fourth quarter of 2023, we observed a notable resurgence in buyer activity, injecting vitality into the market. Although inventory levels have slightly eased, they remain at historically low levels. This dynamic has fostered a scenario where multiple buyers are vying for the same properties, resulting in a flurry of competing offers and maintaining upward pressure on prices.
Dana Trotter: Prices are holding due to lack of inventory. Properties that are compelling and priced well are still selling quickly. There is some real opportunity in the high end of the market right now for properties that have been listed for a time, especially if a buyer is willing to do some work.
Terry Cohen: Prices haven’t changed much due to the tight market. If a property is priced correctly, it will sell close to ask. However if priced aggressively, the price will need to come down.
Lauren Battista: Prices are holding. All of the market indicators are strong — unemployment is low, the stock market is performing well, inflation is slowing, and it appears that interest rates have hit their peak and will continue to decline. I think a good number of buyers were waiting on the sidelines for a market correction. It really didn’t happen. If a property is priced properly, it goes quickly and often with multiple bids. Where you are seeing the price adjustments are on properties that came out with price tags that were too ambitious.
Nicole Tunick: We feel that prices will remain relatively steady for 2024. We are seeing sellers being more flexible in terms of negotiating.
Jean Curreri: Truthfully the market always fluctuates slightly in the Hamptons, it all depends on the product. If the property is turn key there will be multiple offers which may mean the home will sell for over ask. I believe with the reduction in interest rates in 2024, this will lead to rising sales prices in the Hamptons.
Jack Pearson: Just as interest rates have leveled off, so has pricing. When more inventory hits the market later this year, pricing should moderate.
Aimee Fitzpatrick Martin: Sellers still have the upper hand. There are just too many buyers for the limited inventory in the Hamptons. Before the pandemic, the Hamptons database of homes had up to 6,000 listings. As of last week, the depleted post-pandemic inventory sits at under 1,700 listings. As we head into spring, the market is getting very active and most real estate experts foresee prices edging upward, not downward. 2024 is off to a great start.
Harald Grant: A lot of sellers were taking advantage during the early days of COVID. Now pricing is more realistic. The need to buy is not as imperative as it was so people are reluctant to pay unless it is realistically priced.
How will the anticipated Federal Reserve rate cuts influence the Hamptons market?
Judi Desiderio: It will be a welcome influence but not a major determining factor as our markets are luxury markets.
Simon Harrison: All our buyers and sellers are investors that employ both sides of the leverage coin, so to speak. Interest rates falling certainly motivates buyers interested in lower interest rate financing, but for cash buyers, their harvested rates for parked capital are also lowered. Our deals in the Hamptons are often cash buyers so it makes sense that interest rates going down also loosens up those same capital stacks to invest in real estate.
Mala Sander: I’m optimistic that potential rate cuts by the Fed will stimulate further buyer interest this year, and unless there is a significant increase in available inventory, prices will drive higher.
Dana Trotter: Rate cuts will absolutely help stimulate the market more especially in the under $5 million range.
Terry Cohen: It will help to a small degree in the Hamptons, but we are not as affected as other parts of the country.
Lauren Battista: Many of our buyers are cash. That said, they will often go for some financing. When rates were at historic lows, it was an easy decision. Money was cheap. Once the rates started rising, they studied the actual monthly payments more closely. Hopefully, the rates will continue to decline. Also, will the rate cuts be enough to motivate potential sellers currently holding mortgages at low rates, to list their properties for sale? With prices still holding, I believe it’s a good time to list.
Nicole Tunick: Even though the Hamptons is not as influenced by interest rates, the Fed’s rate cut will do a lot for consumer confidence, especially in the lower-end price ranges. If and when the rate cuts begin, we foresee a robust buying season and possible bidding wars.
Jean Curreri: Positively. Rate cuts always bring in business and those who were on hold will be back in the market.
Jack Pearson: When the Fed does reduce rates it will magnify positivity for consumers to feel better about selling and buying.
Aimee Fitzpatrick Martin: The Federal Reserve’s decision to keep rates steady in January — after two years of raising rates — was largely expected and didn’t have much effect on the Hamptons real estate market. Jerome Powell made it clear that Fed officials need more economic data to be sure that inflation is coming down and closer to its 2 percent target rate before they’ll start lowering rates. As a result, it could be a few months before we see mortgage rates trend down in a meaningful way. As mortgage guru Melissa Cohn from William Raveis Mortgage always likes to say: “When rates go down, prices go up. Date the rate, marry the home.”
Harald Grant: It will allow people to get mortgages at reasonable rates and allow them to purchase properties.
Does 2024 being a presidential election year have an impact on homebuying and selling?
Judi Desiderio: Historically election years cause a pause for some. Oddly for those who hesitate, no matter how it lands they move forward afterward.
Simon Harrison: Electioneering, by design, affects the perceptions of uncertainty in some. However, economic cycles are known to largely absorb events, ignoring many. Individuals are regularly impacted by changing family size, employment, retirement and other factors. Real estate is considered a stable investment in the most uncertain of times, and being able to live in or rent out that investment adds to the stability of it.
Mala Sander: This will be the sixth presidential election cycle I have seen since becoming an agent on the East End. Historically I have seen the election years introduce uncertainty and volatility while the future of the country is determined. So I’m guessing that this year will be no different.
Dana Trotter: While election cycles do tend to distract customers in the fall, we anticipate the first and second quarters will be very active this year with sales and summer rentals.
Terry Cohen: In general, yes. We see election years have some impact more so nationally but less so in the Hamptons.
Lauren Battista: In general, presidential elections create uncertainty, and that is never a good thing for the housing market. We are still facing a housing shortage in this country. Will the next administration be pro-development and ease building restrictions, or will they limit new housing due to concerns about the environment?
Nicole Tunick: This is TDB. Normally this would be a wait-and-see situation. However, we think the rate cuts will outweigh the election.
Jean Curreri: As far as I can see with my recent sales it doesn’t have an impact at this time. But on the other hand if people feel confident with world events they are more apt to take the plunge to purchase.
Jack Pearson: Elections do matter, and historically business has been healthy in an election year. If there is certainly that common sense will prevail, then our markets will thrive.
Aimee Fitzpatrick Martin: Presidential election years are always full of uncertainty, and this year’s election certainly has high stakes ramifications. There may be a slight slowdown in the housing market before the election if buyers and sellers take a wait-and-see attitude but — if it happens — I think it should be short-lived and have a minimal impact on the Hamptons market.
What’s the best way for determined homebuyers to secure the home they want at a fair price?
Judi Desiderio: Again, different price ranges, different markets, different answers. In general, know your individual market, and when you find what you like pull the trigger. Personally, I’ve invested in up markets and down markets for decades with no regrets.
Simon Harrison: Seasoned brokers help guide those searching. They can see zoning or environmental issues quicker than most, have skill in negotiating and are good at problem solving. Most of all, they remain cool under pressure so the parties get to enjoy the process. We suggest a local broker, and the motto “Keep It Simple Simon” comes to mind.
Mala Sander: Here’s my 5 point plan:
1. Work with a knowledgeable real estate agent that is well-versed in the area you want to be in. Just because you have a friend that’s a broker in another market (like NYC), does not mean they understand how to get you the best home for the best price on the East End.
2. Be ready to act. You should have your financial house in order (get preapproved), and know what funds/limitations you have to work with.
3. Once you start looking, be sure to open the aperture on your criteria, figuring out what are must-haves and nice-to-haves.
4. When what seems to be the right house at the right price turns up, you should act immediately, don’t second guess yourself, and most of all, do not wait to see if another buyer would like it. Make a competitive offer, and expect a counter offer (negotiation). Yes — write a personal letter to the seller telling them why you are the right buyer.
5. Be prepared to negotiate, and be prepared to walk away if the bidding or the price start to feel counter to your needs or objectives.
Dana Trotter: After the buyer learns the market and sets a goal, it helps to work with an experienced broker who can recognize relevant opportunities and find value on and off the market. When the buyer and broker find the right property and reach a deal, it’s a good strategy to get an inspection and go into contract as quickly as possible. Reliable home inspectors and local attorneys are key pieces making the buying process smooth and sound.
Terry Cohen: The best way is to do research, understand the recent trades and what’s currently on the market. I always stress to buyers it’s crucial to have the best info they can to make an educated decision. And a good real estate agent will help ensure you have that info.
Lauren Battista: Work with an experienced agent that knows the local market and put a strong opening offer on the table. With limited inventory, buyers that put in a lowball offer may be missing out on a property that they really want. This is especially true if you have been on the hunt for a few months and the house checks most of your boxes. If this is going to be your forever Hamptons home, don’t nickel and dime the seller. Put a fair price on the table and make it known that you are a serious buyer.
Nicole Tunick: A prospective buyer should educate themselves to the market with their broker, be preapproved and have their finances in place. Be ready to make realistic offers that will help you secure your Hamptons home.
Jean Curreri: As an informed Realtor, I educate my clients with the most recent sales in the area in which they are interested in and I discuss all the attributes one home may offer than another. Buyers should also be preapproved or have proof of funds ready to go when they are looking to make an offer on a home to compete against other bidders in many cases.
Jack Pearson: To continue your search consistently and hire a broker that can guide that ship and be on the lookout for “off market” and “coming soon” markets to alert buyers. And to monitor existing “for sale” properties that have been on the market for a while that have had price adjustments.
Harald Grant: By hiring a good and credible broker who can show them other properties that are priced correctly or have sold at correct prices — and then go back to the existing home they are looking for and use the research they have done with their broker to bid correctly on their new home.
In what ways does the high end of the market behave differently than the bottom 90 percent?
Judi Desiderio: Many things that influence the majority of our clients don’t have an impact on the decisions of the uber wealthy.
Simon Harrison: Out of 1,670 properties sold in the Hamptons last year, a total of $5 billion in real estate, only 65 sold over $10 million last year. The majority closed between $1 million and $2.5 million, and I can assure you that every single one of those investors is at the high end — for them. As a seasoned local broker, I believe they’re all high end, and it’d be rude to think otherwise.
Mala Sander: The high-end market is driven increasingly by cash buyers who are looking for luxury lifestyle amenities (such as waterfront, dock, tennis, home spa, gym, and indoor/outdoor entertaining spaces). They typically want resort-style living on larger properties that offer privacy. Cash buyers tend to be less sensitive to interest rate flux, but are looking for the best legacy properties from a long term investment perspective.
Dana Trotter: The high end of the market generally has a longer time on the market and fewer trades due to the smaller audience. This segment of the market is generally liquid and will trade properties confidently despite higher rates and outside market factors.
Terry Cohen: Sometimes the high end market is more discreet — more off-market deals and quiet listings. Higher-end properties are typically unique deals that don’t always go along with the larger market trends. Special properties, special prices!
Lauren Battista: The high-end buyer tends to know exactly what they want and where they want to be. If they are looking for an oceanfront home, they will not consider the bay or a home on an inlet. They often want a certain town or village, and privacy is very important. You hear stories about a person buying a very expensive home that’s only a few years old and a couple of months after the closing it’s been demolished. To get the layout and finishes they want, in their desired location, they will often decide to take the home down and rebuild.
Nicole Tunick: One word: everyway. Buyers and sellers at the top of the market are generally not as affected by market conditions.
Jean Curreri: In many instances, higher-end purchasers pay cash for the properties they are interested in. In other cases the lower 90 percent are financing at a high rate.
Jack Pearson: The high-end market tends to maintain a more consistent level, as this client base is less sensitive to interest rates, for most of these buyers are purchasing with cash.
Harald Grant: At the high-end there is more emotional buying. Buyers aren’t as concerned about price — they are more concerned with location and size of the property. It is more important for high-end buyers to buy properties that work for their needs.
How is the summer rental season shaping up?
Judi Desiderio: We have written more leases this past January than last year. I anticipate a robust rental year.
Simon Harrison: We are seeing solid demand for quality homes, and while we don’t do short-term vacation rentals, some of our buyers have bought investments simply to rent them out for various time frames.
Mala Sander: Coming in hot! My team is very busy with 2024 rentals. One month into the year and we have already booked 25 rentals!
Dana Trotter: Summer rental season is in full swing. We actually saw a lot of leases signed at the end of 2023. There is a lot of competition with plenty of inventory so being priced correctly is key.
Terry Cohen: The rental market is on fire right now. If you want a good summer rental, don’t wait and make the trip soon! For the longer term rentals, it’s very strong and active.
Lauren Battista: So far, it’s been pretty strong. Properties are renting early and at or close to the asking price. In the fall, I had a lot of folks re-renting their homes from last summer. Starting after the holidays, it’s been a steady stream of people coming out and making offers. It appears that people are going to be staying closer to home this summer.
Nicole Tunick: So far this season we are faring better than 2023 but the market is definitely not as robust as the first two years of COVID. Though, it is still early in the season, and we feel that travelers that spent time abroad will look to be back in the Hamptons this season.
Jean Curreri: We have begun to see an early renting season with many properties getting rented. However, I am also seeing a trend for shorter rental periods instead of the entire summer season. Last year, the market was saturated with rentals due to the COVID crisis, which influenced those who used to rent to purchase instead.
Jack Pearson: Very robust and serious interest on all levels.
Aimee Fitzpatrick Martin: 2023 was an awful rental year with an overabundance of inventory and many renters traveling outside the Hamptons, but 2024 is shaping up to be a robust rental year. The rental market in the Hamptons historically has kicked off around Presidents Day, but this year many good summer rentals were already snatched up last fall. There was the typical holiday lull, but now the phone is ringing again. Inventory is dwindling quickly so anyone wanting to rent this year should move fast.
Harald Grant: We will have a strong rental season this year. The U.S. market will be strong because most of the U.S. renters will stay here instead of going abroad.
What’s the best reality TV show about buying and selling real estate?
Judi Desiderio: I don’t watch them. I prefer CNBC.
Simon Harrison: That’s funny. I live the most interesting real estate brokerage firm reality, and the best analogy might be a competitive cooking show. In deference to my gratitude to being one of the top agents here, I will admit that I sometimes have days where I need cable TV to wash over me at the end of the day. OK, back to the question. A seasoned broker’s day is like a three-star chef’s dinner service. The chef has to have 10,000 hours of understanding how a team of people get through the day smoothly. The whole crew are all artists in their own right. Every plate matters. Timing matters. Temperature matters. It’s a rush of hungry, demanding buyers who are at heart generous and appreciative. Building a home and a sound investment at the same time is like building a beautiful three-course meal, and while our sellers keep referring us. It rarely gets salty.
Mala Sander: I’m too busy selling real estate to watch fictionalized “reality” shows about it!
Dana Trotter: I might be biased but I would have to say “Selling Beverly Hills” with Mauricio or “Million Dollar Listing New York” with Tyler are the best!
Terry Cohen: Sorry but I don’t watch reality TV!
Lauren Battista: I’m not the person to ask. I made it through one episode of one of the “selling luxury homes” shows and I couldn’t bear another one. Not even close to reality. As agents we do so much more than showing homes. They never show an agent at a home inspection, meeting with a home stager, attending Planning Board meetings, or sitting with the local building inspector reviewing building files. On another note, how do these agents wear 6-inch stiletto heels? They must never walk on the grass.
Nicole Tunick: That’s easy: “Million Dollar Listing Los Angeles.” Shout out to the Douglas Elliman teams who headline the show!
Jack Pearson: The CeeJackTeam focuses on our own reality that we live day to day servicing our clients. Plus, our team-produced video tours are just as engaging as any reality show, while showcasing some of the finest properties in the Hamptons — and as a bonus, they are actually available for purchase!
Aimee Fitzpatrick Martin: I’m old school and like “House Hunters.” I laugh because there’s nothing “real” about it. In “reality,” agents don’t just show three houses and have the buyers pick the winner. Although it’s not the norm, I’ve worked with some buyers for two years so they could find their dream home. The process of looking for homes and getting to the closing table can be a long, arduous and very stressful business. But it’s fun and wonderful, and it’s my passion.
Harald Grant: The Harald Grant show at 50 Nugent Street … no, no, the best reality … is working in the business for many years. You begin to see the peaks and valleys and understand the market better. Living and breathing the market over many years, allows seasoned brokers to determine the market better than anyone else.
