This time a year ago, getting a house in the Hamptons for the summer was akin to winning the lottery. After New York became a coronavirus hot spot, wealthy residents paid what they could to escape the city and secure a place in the affluent enclave.
One man from the city paid nearly $2 million to rent a Bridgehampton property from April until Labor Day. Many more booked properties a year in advance to secure their spot for the upcoming summer while others stayed year-round, perhaps changing the region’s status as a summer escape for good.
“Both buyers and renters last year were stretching past budget just to secure something,” Noel Roberts, the head of the local Nest Seekers’ Private Client boutique practice and star of Million Dollar Beach House, told Inman. “This year and the tail end of last year saw buyers assess what the pre-COVID comparables were. Many returned to ask questions like ‘when did the sellers buy?’ and ‘how much did the sellers pay for it?'”
Today, it may not be the same flurry of desperation but the market is still struggling with a lack of inventory and adjusting to an influx of year-round residents. A luxury real estate expert and longtime local, Roberts talks to Inman about how the Hamptons market looks today.
The 2020 Hamptons market was characterized by the wealthy “panic-buying” and “panic-renting.” What’s the situation like now?
2020 saw most people in a sense of panic and frenzy. Everyone was snatching up toilet paper and the rich were no different except in that they were snatching up properties.
Both buyers and renters last year were stretching past budget just to secure something. This year and the tail end of last year saw buyers assess what the pre-COVID comparables were. Many returned to ask questions like “when did the sellers buy?” and “how much did the sellers pay for it?”
They’re being a little bit more conscious and reasonable about what the situation will look like in a post-COVID world and what their assets are going to be worth. Nobody wants to make a poor decision, especially when we’re talking about $5-$10 million assets, for the long run.
Traditionally, March and April were the time to start looking if you wanted to be in the Hamptons for the summer. Is it fair to say that those who look now are already late to the game?
You’ll always have people who are late to the party. The plan didn’t work out for whatever reason and they’re trying to find a rental a few weeks or a month out. People are just being less picky in order to make sure they have something and are not left in the dust for the summer.
People began securing their rental for this year last year. Never before have you seen people trying to secure rentals nine to 12 months in advance. They left the place in August and were already trying to get a place for next year.
So it seems like inventory has not improved much.
I think the number of homes coming off the market has dropped off. We’re still dealing with both buyers and tenants swooping in to either bid or snatch them up as soon as new things come on [the market.]
Inventory is still rough, especially on the rental side. Owners are still getting what they’re asking.
It’s interesting because on the one hand, I’m representing buyers and tenants who are trying to secure a home that they feel is reasonable, and then on the other hand I’m representing sellers and landlords who want to capitalize on the continued interest and people coming out to the Hamptons.
But there is certainly a market that is under $2 million that is still quite active. The median home sale number has risen to around $1.4 million compared to this time last year. It’s picked up, but it’s still quite active for buyers who were looking for those starter Hamptons homes — $1 million to $2 million and up.
Even after the year we’ve had, the association most have with the Hamptons is of a summer retreat. Has the pandemic affected seasonality as much first appeared?
Wholeheartedly. I live out here year round and never before could you come out here in November or January and still see this amount of traffic and cars in the parking lots. Many people remained out here year-round.
I’ve certainly put a number of my clients into offseason and year-round rentals. The seasonality has changed tremendously.
What do you think will happen in the Hamptons market at the end of 2021 and for 2022? Could interest drop off as people turn to international travel to make up for lost time?
It’s tough to look out that far, but I do know that many more people than usual will have converted to living at the Hamptons year-round in the end. They’ve made permanent changes to their work/living situation and have made this their permanent homes.
Once you own a home here, it’s a great market to rent it out for the month of August, recoup a lot of your expenses for the year and then go off and travel. They will rent their house out for a month or two, go travel to Greece or Portugal or wherever it will be and then come back to The Hamptons as their home base.
What else are your clients talking about?
Last year, you not only had the pandemic that caused a flurry of activity but you also had an administration change that is almost certain to affect the wealthiest Americans. Some people wanted to get out of their properties, especially if they’ve been seeing a lot of appreciation.
A couple of my clients wanted to get out by the end of last year and I think we’re going to continue to see a lot of people do the same before any new changes come into effect. They’d much rather take the hit now with the current capital gains tax than they would potentially in 2022. It was a great year if you were sitting on some capital and wanted to buy a home out in the Hamptons. If you’re in it for the long-haul, it continues to be a great place to park that capital.
If you’re a seller, a lot of the conversations I’ve having with my clients who were north of the $5-$10 million mark have been about exit strategies.