The Hamptons real estate market has been on a dazzling hot streak and shows no signs of slowing down.
From $1 million cabins (actually) to multimillion-dollar megamansions, “we’ve seen a massive year-over-year surge” for the first quarter of 2021, says Jonathan Miller, president and chief executive officer of appraiser Miller Samuel Inc., which compiled a quarterly report for Douglas Elliman. Total available inventory, the report found, has plunged nearly 41% compared to last year. “All segments of the market are strong,” Miller says.
As with other vacation destinations and affluent suburbs, including Palm Beach, Fla., and Greenwich, Conn., much of the past year’s sales bonanza can be attributed to wealthy people who were desperate to get out of New York and other urban areas during Covid.
But unlike those neighborhoods, where the supply in the luxury sector (defined as the top 10% of the market) has plummeted, the Hamptons market somehow is still throwing up more high-end listings to meet demand.
“Hamptons listing inventory in the luxury sector is up 49.9%” year over year, Miller says, “while overall inventory for the Greenwich luxury market is down 36.8%.”
And that’s a modest decline compared with Palm Beach, where first-quarter inventory for single-family homes plunged a staggering 79.7% from a year earlier. Its luxury inventory, which represents the top 10% of the market, is down 59.4%, according to a Douglas Elliman report.
The Root Causes
Top Hamptons brokers diverge on the source of this apparently boundless luxury housing supply, where the starting price is $3.85 million.
Some attribute it, in part, to older homeowners looking to cash in on a bull market.
“It’s a generational change,” says Michaela Keszler, a broker at Douglas Elliman. “They’ve had their houses for a long time, and they want to downsize or move somewhere else.”
Others say a significant chunk of the material is coming from developers who, even before the pandemic began, were ramping up spec homes that are only now coming to market. At the beginning of 2020, even before the pandemic, “developers started coming in saying, ‘We’re running out of inventory, let’s start getting building permits,’” says Compass’s Lori Schiaffino. “We’re [now] seeing more inventory and lots more redevelopment.”
Existing homebuyers are also trading up, “where people decided they need bigger homes and more space now,” says Deborah Srb, a broker with Sotheby’s International Realty. “Now they’re including extended family, and they just have a different perspective of what makes a home comfortable.”
Everyone agrees that inventory might be coming into the market, but high-quality homes, particularly those priced from $3 million to $10 million, are still in painfully short supply.
“I can tell you on a personal level, there’s nothing over $4 million that’s good,” says Christopher Covert, a broker at Compass. “We just can’t find the inventory. If you know someone bringing it on, let me know. I’m down to two listings, and this time of year, normally I’d have 12 to 15.”