As the weather turns cooler in the Hamptons, the snowbirds understandably fly south. We are joining in by taking a peek behind the hedges in the Palm Beach area for the 2022–2023 season. As the COVID-19 pandemic has waned, and interest rates have skyrocketed, the real estate market nationwide has changed. We asked brokers in the know, in both Palm Beach and the Hamptons, to weigh in on how the two markets are faring. We are curious, are the markets responding the same way, or differently?
Chris Leavitt, Douglas Elliman
“The end of the summer was slow and everyone who lives in Palm Beach was out of town, including agents. It was a ghost town for the most part. In the past 48 hours since November 1, everyone seems to be back and things are bustling again. Calls for new listings and showing requests have increased dramatically and offers are coming in. It’s as though the light switch turned on when November 1 hit. We have very little inventory and many buyers. Palm Beach is one of the hottest in-demand markets regardless of what is going on elsewhere, so I think we are in for another banner season of record-breaking sales.”
Lori Schiaffino, Compass
“The Palm Beach and Hamptons markets typically do not follow national trends. The Hamptons will always be a desired destination outside of Manhattan, and New York City’s lure will never disappear. Palm Beach and South Florida are moving toward becoming the epicenters of finance in America with their tax-friendly and pro-business environments making them desired destinations for many. This includes the finance sector and all the industries supporting finance. In both Palm Beach and the Hamptons, inventory was depleted during the pandemic, and product in both locations has not yet caught up to demand. There remains a disconnect between buyers and sellers related to pricing. Given rising interest rates, geo-political uncertainty and that the pandemic frenzy has waned, many cash buyers are in a “wait and see” mode expecting prices to adjust. It will be up to each seller to decide if they want to close this gap and adapt accordingly.”
Elliot R. Epstein, Sotheby’s International Realty
“The Hamptons and Palm Beach markets have both experienced unprecedented activity and price increases in the last several years. Since the late spring sales activity has slowed in both markets due to economic uncertainties. The Palm Beach rental market is gearing up as the season approaches with very little inventory and the Hamptons market is going in the opposite direction as the season recently ended. Sales are about the same in both markets, slow and steady.”
Dana Koch, The Corcoran Group
“The Palm Beach market and Hamptons market have always had many parallels (as our clientele is the same in many respects) although Palm Beach isn’t as Wall Street-driven as the Hamptons. Currently, neither market has the sense of urgency that we experienced during the pandemic. As a result, buyers now have the opportunity to evaluate their options rather than make instant decisions. The Palm Beach market returned to its normal seasonal pace over the summer. Presently, the Palm Beach market has just under 45 homes for sale which is historically low. At the beginning of our high season, we normally have between 150–200 homes for sale. The Hamptons market is much more vast and spread out. Palm Beach has 2,200-plus single-family homes on the entire island. Of utmost importance to note is that we are still dealing with a lack of inventory which will continue to propel our market. Though not completely immune to some of the headwinds (equity market volatility, interest rate hikes, inflation) that both markets are contending with these days, we are still very much in a “lack of supply and a strong demand” world where pricing is holding steady.”
Adam Hofer, Douglas Elliman
“Things have definitely changed in the real estate market as a whole, but both the Hamptons and Palm Beach markets remain strong for a number of different reasons. As people have become more mobile and have gotten to experience how wonderful it is to live in these areas, the once secondary home has become the primary focus, which continues to drive these two unique and coveted areas. On top of that, these areas have changed dramatically to accommodate year-round living and make it a reality. Lastly, we have seen a huge migration of the financial services industry to West Palm and Miami, making living and working there even more viable. So far, interest rates have not really affected my clients and the decision-making process. Well-positioned and savvy buyers understand that real estate is still the best hedge, and acquiring property in the right place at the right price takes precedent over the interest rate, which is ultimately something that can be changed or accounted for. With that said, I am excited to have recently purchased a place of our own in the Palm Beach community and to be expanding our team there as well.”
Jennifer Friedberg, Compass
The real estate market from the Hamptons to Palm Beach has shifted from the pandemicinspired years of 2020 and 2021. However, the allure of the East End and Southern Florida is still present, and people will continue to buy. Homes in the Hamptons are beautiful, and buyers purchase a lifestyle with easy access to New York City and stunning beaches, often cited as the top in the country. Plus, unmatched dining, shopping and art opportunities. In Palm Beach, properties are large and highly coveted. The barrier island only has a couple of thousand homes, adding an exclusive desirability factor. But we are undeniably seeing strong financial headwinds now with less inventory in both markets and buyers spending more time looking, waiting for prices to come down, and hoping for bargains. Last year we had bidding wars. Now, we see transactions at or below ask. Overall, interest rates will likely stay high for some time, and it is fair to presume that overpriced sellers will need to become more open to negotiations if they are serious. Fairly priced turnkey properties will still go quickly.
Michael Petersohn, Brown Harris Stevens
The Hamptons inventory conundrum: It has become increasingly apparent that we live and work in a bubble on the East End of Long Island. While the Fed has conspired against the real estate industry in general, we remain in our cocoon, it seems. There are simply more buyers than sellers. Sure, there are plenty of “vultures, bottom feeders and tire kickers,” but for the most part rates went up, prices came off 10–15% and it’s (almost) back to the frenzied pace of 2021. Almost. That said, the mix of homes that are selling in the Hamptons continues to get pricier. Let’s face it, we are in a luxury market one hundred miles from the financial center of the universe. Our beaches and towns are beautiful, and we are simply running out of room. For the first time, sales of properties over $5 million made up almost 13% of sales last quarter and the median price was approximately $1.6 million. Inventory remains close to a 12-year low. We all know that the pace of sales has ebbed a touch, but I remind my clients that we still average just 70 days before finding buyers. That’s an enviable stat compared to most of the nation.
This article appeared in the November 2022 edition of Behind The Hedges magazine. Read the full digital edition here. For past Real Estate Roundtables, click here.