Two years into the Covid pandemic and the queue of enthusiastic buyers looking for a Hamptons home persists. We are witnessing a paradigm shift in remote work policies that has enabled families to spend more time out east. Unlike many parts of the United States, our customers have benefited financially through the pandemic, continuing to work remotely with little financial impact.
Covid has brought an unprecedented number of new families to the east end. The decision to list in this sellers’ market isn’t always clear. A mix of factors has caused housing inventory on the east end to reach an all-time low. What does all this mean for Hamptons real estate in 2022? Let’s explore.
Meet the Neighbors: What’s Driving Change
One could almost ask the question, what isn’t driving change in the real estate market right now?
Corporate culture is changing. The pandemic has profoundly altered the ways we live and work. Thirty-three major companies are going permanently remote and more will surely follow. And in perhaps a hint of things to come, the e-commerce company Bolt announced a shift to a permanent four-day workweek.
Employees are driving change with new expectations. Staff are leaving jobs in record numbers seeking remote or hybrid positions that fit their new lifestyles; those who remain are wanting to continue some aspect of work-from-home. Companies are responding with policies that emphasize flexibility so employees can adopt their best style of work. As a bedroom community of New York City, the Hamptons will certainly lure more and more families who are able to negotiate these arrangements.
Businesses are driving change with measures to cut costs and lure new talent. Companies are downsizing office space and evaluating the cost savings from new remote work policies and reduced real estate holdings. Many boards are making the decision to downsize corporate headquarters so they can broaden their reach into non-local hiring markets and tap into new talent pools.
Crunching the Data: What Might 2022 Look Like?
It’s been nearly two years since Covid started making headlines – what’s next? I wasn’t gifted a crystal ball this holiday season so I turn to the data. I predict 2022 is going to be another momentous year.
Fortune recently reviewed the results of the seven leading housing market forecast models for 2022. Here are some highlights:
- Six of the seven models predicted an increase in the median price of existing homes, two as high as 13 to 16 percent.
- Some deceleration was accounted for with expected hikes in mortgage rates, but four of the seven models still report an increase.
- Only one model predicted that U.S. home prices would decrease, but they would still be up more than 20 percent from pre-pandemic levels.
Locally, Saunders and Associates’ 2021 third quarter market report revealed a 35 percent increase in sales of all product classes over last year, with median prices up by 22 percent. And through the end of the fourth quarter in 2021, new deal originations remained very active.
Initial analysis of year-over-year fourth quarter data is showing dollar values are up, even though the number of transactions is down due to inventory shortages. This is telling us that buyer momentum persists to purchase, and I expect that eagerness to extend into 2022.
Buyers: Should We Pause or Dive In?
We are incredibly fortunate to live and work in such a beautiful and sought-after destination. The challenge our buyers have on the east end is not the ability to purchase a second home, rather, the ability to find a home to purchase.
I’m working with buyers that are considering pausing their search in anticipation of a major price correction. When I study the data, review inventory and consider current demand, I do not foresee one coming any time soon. The majority of models predict home prices will continue to grow in 2022. I advise buyers to stay in the game.
I’m also working with buyers that are following my advice and remaining alert and positive. If you’re eager to purchase a home in the Hamptons, partner with a broker, do your financial due diligence and know the difference between your “must-haves” and “nice-to-haves.” With your search parameters set, be patient. But when something of interest pops up, clear your schedule to come out and preview, and be aggressive with your offer. Many homes are getting multiple full-price or above-ask offers with fewer contingencies.
Sellers: Should I Stay or Should I Go Now?
Now let’s explore inventory or the lack thereof. This is where sellers enter stage left. Since it’s a seller’s market, it’s easy to be a seller these days, right? Not so fast. The decision to list is not as easy as it would seem, and market conditions are causing some sellers to wait, but others to jump right in.
Certain sellers are still hesitant to list during the ongoing pandemic. A few factors that have exacerbated this include:
- The recent spread of the Omicron variant
- Travel restrictions (or the looming possibility)
- The desire for space (some who were planning to downsize have changed course)
- The goal of staying longer to recoup equity
Some sellers don’t want to be buyers with current market conditions. For sellers that own a single property out east and want to remain, they must weigh the sell/buy decision and are taking time to consider their options. In the interim, many are refinancing with record low rates and putting money and effort into improvements to prepare their home for a pending sale. But the intention to sell is there.
Market conditions are ideal for selling, and for many sellers the decision to list could not be any clearer.
Consider these three crucial and intertwined factors:
- East end inventory is at an all-time low
- Buyer demand remains high
- Mortgage rates are historically low
Most sellers are selling a second home and have another residence to go to. Many that had been renting their properties during covid are tired of playing the landlord game. Increased traffic and commute times have been cited by many sellers as a reason to make a change. Whatever the reason, they’re ready to take advantage of this unprecedented market, simplify or downsize or finally pursue a new chapter they’ve been considering for some time.
Sellers that want to capitalize on this market are listing now, making plans to sell and taking time to rent or travel as they contemplate their next move. Many have been waiting to be on the other side of the 2021 holiday season, and I hope for and expect new inventory in the immediate future.
What a ride it’s been and will likely continue to be. Whether your goals are to sell or buy, if you’re willing to stay belted in, I’m eager and excited to take the ride with you!
Happy, healthy and abundant 2022 to you and yours!