In December 2014, Fannie Mae published a national survey which included the following findings: Of those surveyed, 46% believe home prices will rise in 2015 while 8% say they will fall. Overall 64% think it’s a good time to buy, and 40% believe it’s a good time to sell. Finally, 45% believed their financial situation to improve, while 52% believe it will be easier to qualify for a mortgage.
But what does all that mean for the Hamptons market? For the East End point of view I asked several Hamptons brokers for their views on the 2015 market.
“We are experiencing sales listings coming on the market at more realistic prices,” says Aspasia “Cia” Comnas, Executive Managing Director, Brown Harris Stevens. “Sellers understand that long periods of time on the market due to overpricing hinder the effort to achieve the highest possible price and accept the fact that today’s buyers are more market savvy. Days on the market data is readily available to buyers. While helpful to keep overpricing in check, buyers should remember that the Hamptons market is a secondary home market and time on the market will in general be longer than in a primary home market. The rental market has been increasingly competitive as it is common place now for selling owners – even in the case of new construction – are willing to rent pending a sale, which has raised the bar for rental properties. Landlords are competing with stylishly furnished, well-appointed newer homes with every amenity. Consequently, some of the older homes are not renting as well. Buyer agency has now more or less become the norm in the Hamptons which was one of the last areas to embrace buyer agency. It has certainly made agency disclosure easier for many agents and has brought the Hamptons in line with the rest of the country where buyer agency with every buyer is standard.”
Dennis DiCalogero, Associate Broker, Douglas Elliman Real Estate spoke to the question of older homes, “Listings will be strong and continue to come on to the market, but the majority will be older homes. Not exactly what the market is looking for. Buyers continue to look for new homes or as close to new as you can get. This is a problem for first-time buyers. The days of buying a new home in the Hamptons for $700k or $800k are almost completely gone. I suggest they focus on location. You can always upgrade the home. Prices in the high end should continue to go higher due to demand and lack of inventory. Mid-range homes, $1M to $2M, are likely to remain at the same price point. This is all contingent on interest rates remaining calm with slight growth.”
“I feel we are certainly trending toward a solid improvement in the Hamptons real estate market,” says Htun Han, Principal Broker, Hamptons Realty Group. “The proven maxim through past economic cycles is that the most desirable locations and properties get affected last in a downturn but pick up first in an upturn, which, for our market, started in 2011-2012 and has gained momentum. Steadily reduced inventory can only help the market gain strength. In East Hampton, even the Springs are getting offers and acceptances quite rapidly. In an improved market, the tendency is for owners to increase their asking prices. My advice is to resist that temptation. Stick with your asking price and seriously consider offers that come their way. The only noticeable impediment to our market improving even faster is the availability of mortgage money. Lenders were burned by the mortgage 2008 meltdown, are more closely scrutinized and regulated by the Feds, and in my opinion, have over-reacted. Obtaining a mortgage is nearly impossible for the average buyer. One has to have impeccable credit scores, a 15% to 20% down payment, and stable employment. If there is a serious desire by our political leaders to increase home ownership, they will need to pressure lenders to loosen up on the qualification requirements.”
I asked how buyer agency was progressing in the Hamptons, Sarah MInardi, Associate Broker, Saunders & Associates explained, “The market has been busy since the holidays ended. Days on the market all comes down to the price point. If buyers and brokers see value in the listing, they are showing the homes and reaching agreements quickly. In the North Woods of East Hampton, inventory of homes under $1M has dwindled greatly, and in the $700k and under range, basically non-existent. Homes for sale between $1.2M and $1.9M in the Northwest are up against a lot of competition. If they are going to break the $2M mark they need to have close proximity the village with all the modern amenities. To break the $3M mark the house better be brand new, or very close to it, with all the bells and whistles.”
Minardi went on to say, “Buyer Agency is happening more and more, and has become much more universally accepted among agents and agencies. The commissions come out of the proceeds of the sale so no need to have any arguments there. If I am working with a buyer, we start out of the gate that I am working as their agent and it is very clear from the start.”
Regarding rentals Minardi says, “Rentals look to have a stronger season this year. Potential tenants are better off working through a broker who knows landlords and homes versus going on websites such as AirBnB. I had a potential tenant who went that route and found out after the fact that the landlord has had issues with returning security deposits. Chances are he’ll call me the next go-round.”