Pity The Developer
Developers are a factor in the Hamptons real estate market, but rising land costs, increasing cost of material, and fiercer competition for available parcels mean that however much new construction has hit the market in the last quarter, it isn’t enough.
“I think developers have run out of material,” says Keszler. “There’s not so much land around, or tear-downs they can buy, and the pricing is difficult for them because, of course, prices went up.”
The fact that many buyers over the past year wanted a house they could move into immediately is making it even more difficult. “I’m seeing a scarcity of newer construction at all price points,” says Frank Bodenchak, a Sotheby’s International Realty broker.
Retirees Cash In
Instead, much of the volume is coming from people who saw the white-hot market and “said, ‘If we’re ever going to sell, now would be the time,’” says Schiaffino.
Many of these properties “are somewhat at the end of their life span in that they haven’t been renovated,” she continues. “These families are saying, ‘You know, I can sell this, and now is as good a time as any to get a healthy price for my family’s home,’ and finance and tech wealth is coming in and buying these properties up.”
A good chunk of people making this decision “have decided to size down,” says Srb. “The reality was that they wanted something smaller and more manageable. Those are empty nesters that maybe had adult children who are buying their own [vacation] homes.”
Some brokers have taken to actively courting this demographic in an effort to add inventory to the market.
“We’re pleading and prodding for people to bring houses onto the market,” says Mala Sander, a broker at Corcoran. “And there’s a lot of people that do say, ‘Hey, I’m hearing the real estate market is super hot, I got your letter or mailer or whatever, and I want to talk to you about putting my house on the market,’” she continues. “There are people who were going to retire in a couple of years who are saying, ‘Let me take advantage of it right now.’”
More Supply, More Demand
In the meantime, prospective buyers need to be prepared to spend serious money on a serious property. “Anything under $7.5 million has gone immediately,” says Bodenchak. “The market above $10 million is just starting to get more active, too,” Keszler says, “but it’s really demand up to $10 million” that’s the sweet spot, she continues.
Brokers say houses that are overpriced will still languish on the market, but those that are priced to sell consistently ignite bidding wars.
“I tell you, it’s brutal,” says Keszler. “You decide you like the house, and you see your family there, and you have your offer accepted, and then someone comes in with more money. It’s a tense time, and there’s no deal done until it’s signed.”
Generally speaking, “when a new home comes on the market and it seems like it’s priced really well, it doesn’t last more than a week,” Srb says. “I’ve been doing this for 28 years, and I’m stunned by the breadth [of demand] from young to old. It’s almost like they’re discovering the Hamptons for the first time.”
Covert speculates that most of the inventory that would traditionally be for sale has been occupied by renters or homeowners who have nowhere else to go. “I think that come August, homes that have been occupied since March of 2020 by renters or owners” will start to come onto the market, he concludes. “Something’s gotta give.”
This article was provided by Bloomberg News.