Today’s real estate market is complex nationwide. An all time low listing inventory is met with historic buyer demand. On the South Fork of Long Island, the market pressure feels even more tense; as Judi Desiderio of Town and Country recently commented, there is nowhere to sprawl. Even the slightest injection of new listings in a tight market like this can lead to buyer activity that sets the market tone of neighborhoods and property types going forward.
It seems the Hamptons 2020 buying spree is over and 2021’s Hamptons real estate market is starting to show its strength of character. If positive conditions persist and widely accepted economic forecasts come to fruition, the market overall should continue to improve in 2021. However, some property demand and subsequent price growth will likely outpace that of other property types. In 2021, the type of listing seems to matter increasingly as preferences refashion.
New listings coming on the market have picked up, and if history is any indicator, they should remain strong for a few more weeks, dipping as Memorial Day draws near. It is likely that the new supply won’t be enough to alter the course of Hamptons real estate price increases. However, the story could be different if new listing supply increases through the summer season. That and other converging factors will determine the market’s future.
The Hamptons real estate market benefits from a set of economic circumstances that most of the country does not, which impacts the market in a unique way and is causing a shift in the nature of the market.
The Hamptons market shift factor #1: How the wealthy use their homes.
In late 2020, news articles noted home amenity products like hot tubs and gym equipment were selling out, and contractors were backed up from the influx of home renovation requests. Homeowners have upgraded their homes and lifestyles. Money, personalization, care and commitment go into these types of upgrades.
To help explain the impact of this trend, I reached out to Jack Kelly and Louis Myrick, co-founders of JK Domestic Collection, a premier global search firm that specializes in high-end domestic staffing.
“For decades, Hamptons homeowners on a Friday afternoon would pile the kids and a nanny in the back seat of their SUV and bear the brutal traffic of 27 East to their beach residence in the Hamptons,” explains Kelly. “Those days are over. There has been a massive exit from the city this past year to make the Hamptons their permanent residence.”
According to Kelly, seasonal hires have turned into full-time positions, live-out domestic staff have shifted to live-in, and salaries have jumped 30% in the last year. Homeowners have even given up a cherished guest bedroom in favor of live-in domestic staff, while social distancing remains important to many Hamptons families.
Louis Myrick states that “speaking basic English and having proper working documents is yesterday’s news. Clients are expecting domestic staff to have basic computer skills to buy not only cleaning supplies, but also luxury home goods online.”
“The role of the butler is back in full swing,” Kelly says. “Hamptons clients are beginning to utilize their 15,000-square-foot house in a traditional, but more relaxed manner. We are seeing a lot of recent graduates from hospitality school who can’t find employment in the hotel sector are taking on these roles of butler/majordomo. Clients are requesting two butlers for both the lady and gentleman of the house,” Kelly continues. The modern butler role creates playlists for the house, plans the winter getaway to Aspen, and purchases wines at auction to revamp the wine cellar.
Uniforms are relaxed — luxury service sans gloves or tux. There may be a shift to modern day Downton Abbey style underway, where more is taken care of for you within your own home. Though perhaps a response to COVID shutdowns, will these personalized luxury services be abandoned as we move toward a post-COVID world?
“The world has changed,” Myrick says. “We have reimagined how we work and live. Some will go back to how it was, but some won’t,” he continues. People seem to have found a new pride in outfitting guest bedrooms and entertaining spaces to the teeth, while making sure they’re fully staffed for guest visits.
Unlike 2020, where the market was essentially a frenzied rush on property, the Hamptons 2021 market is showing buyers adjusting their searches to how they believe they will be living as the world finds its post-COVID normal. The shift in how the wealthy use their homes will dictate how the type of property listed for sale becomes increasingly important in the Hamptons. We have already seen this start to happen in the first quarter of 2021.
“What began as a ‘what you can get’ caravan of houses up to around $7.5M ultimately pushed my clients’ budget well beyond $10M,” says real estate agent R.C. Atlee of Compass.
After working with his clients for a few months, Atlee was surprised; “They started asking to see $12-15M properties, and I thought ‘Bummer, I didn’t take you for looky-loos…’ but in fact it was what I’d call ‘education by inventory’ that adjusted their budget to their tastes and needs — as well as helping them substantiate the value of a purchase at that price point.”
While many families had hoped to travel this summer, slow vaccine rollouts in Europe, as well as projected ongoing shutdowns internationally, have led to some homeowners’ decision to stay put one more summer. Pre-construction is selling, suggesting these buyers plan to be in the market at least a year from now.
For those who have decided to go forward with travel plans and offer their homes for rent, rental interest has picked up in recent weeks and is currently “through the roof,” according to StayMarquis Co-Founder and Managing Partner, Bryan Fedner. Signs point to people not only wanting to be in the Hamptons now, but also in the foreseeable future.
Listing agent Evan Kulman of Compass had projected that 39 Conklin Terrace in East Hampton would set a neighborhood record. That property closed last week for $4.38M, at an 8% discount off its $4.75M asking price, and despite a seemingly large discount, Kulman was right about a record. The last highest relevant new construction to trade in the neighborhood was 80 Sherrill Road in East Hampton, which sold for $4M in June of 2020.
Reading market shifts in the Hamptons is complicated — from frenzy to cooling period is only a matter of chess moves. Follow the next factor in the Hamptons market shift: coming next week.