At the end of Q1 2019, there were 869 unsold properties for sale in the Hamptons, according to a joint report by Miller Samuels Appraisal Services and Douglas Elliman Real Estate. This number of unsold properties was triple the number of unsold properties in the Hamptons compared to last year’s data. This number of unsold properties was also the most unsold properties in Miller Samuels’ record keeping history in he Hamptons.
Homes priced above $1M seemed to be the tipping point for this inventory surge whereas homes priced below $1M sold like hotcakes. In fact, homes priced below $1M represented 59% of the homes sold in the Hamptons during Q1 2019.
Home sales in the Hamptons appear to exemplify the “resetting” of the housing market due to federal tax changes that capped SALT (state and local taxes) deductions for mortgage interest and property tax levies that make second home purchases less feasible.
Jonathan Miller, president of Miller Samuels, said, “We are in the middle of this transition period post the new tax law, where the high end is struggling. What’s actually selling is shifting much lower so there’s more inventory exposed.”
Miller indicated that it would take 7.5 years to sell available luxury homes at the current pace of sales in the Hamptons, the longest, most dormant stretch in his firm’s history.
Not only are sales of luxury homes down, the definition of “luxury” in the Hamptons now means $3.2M rather than the 5-year average of $3.8M. Simultaneously, the median price for all Hampton sales has dropped to $850,000, a -5.5% drop from one year ago.
Despite these drooping sales and prices, Ernie Cervi, the senior vice president with Corcoran, is looking to a better Q2 in the Hamptons due to tax season being over, mortgage rates being a bit lower though rising, stabilizing financial markets and increased inventory that may serve as a reality check for sellers in terms of pricing their homes. Cervi said, “Price adjustment is the trigger. That is what brings people back into the market.”
