Home sales and rentals on the East End of Long Island picked up at the beginning of the pandemic and are still going strong. The high-flying Hamptons real estate market continues to soar more than a year after the Covid-19 pandemic began, demand for homes remains robust in the moneyed Hamptons, boosted by a swell of urbanites settling in.
In search of less density and more space, beginning last March, many city dwellers snapped up relatively reasonable off-season rentals in the beachfront towns and manicured villages on the East End of Long Island. As the pandemic dragged on, many decided to buy a home instead of spending as much as a couple hundred thousand dollars on a summer rental. Enabled by low interest rates and Zoom technology that has made working remotely possible, some enrolled their children in local public and private schools, and helped transform the affluent weekend and summer getaway into a year-round community. [Source: NYT]
“Our towns are abuzz all week and all weekend,” said Todd Bougard, regional manager for Douglas Elliman Hamptons. “We don’t see any end in sight.”
In the first quarter this year, home sales surged 48 percent compared to last year. According to a report by the appraisal company Miller Samuel for Douglas Elliman Real Estate. The median sales price jumped 31 percent to $1.3 million. Meanwhile, available inventory tumbled more than 40 percent. Bidding wars, with properties trading over the listing price, occurred in nearly a quarter of sales.
“The Hamptons rapidly rebranded itself as a co-primary market instead of a luxury second home market,” said Jonathan Miller, president and chief executive of Miller Samuel. “After the pandemic is brought under control or managed, we still have Zoom. That is a structural change. We have proven during the pandemic that it works. It does enable people to work elsewhere.”
As a result, commutes may be longer but likely won’t be as frequent. “The tether between work and home became longer,” Mr. Miller said. “It is a fascinating reset of the way we live between home and work.”
Record sales activity across the Hamptons “is due to high demand and very low inventory,” said Philip O’Connell, executive managing director of the Hamptons for Brown Harris Stevens. “Buyers are desirous of more space both indoor and outdoor as remote work and schooling continues.”
A blend of remote and in-office work persisting “for the foreseeable future” will allow buyers “to utilize their Hamptons homes substantially more than in prepandemic times,” Mr. O’Connell said. Recent buyers are almost entirely from the metropolitan area and other parts of the country. “As travel opens up, we expect a small percentage of international buyers will re-enter the Hamptons market,” he said.
The shift to a co-primary market is also happening on the North Fork, in the Hudson Valley and upstate Connecticut, Mr. Miller said. (Palm Beach, Florida, and Aspen, Colorado, also enjoyed a sales boon fueled by top brass who often have multiple homes and only need to be at headquarters once a month.)
In the Hamptons, sales of homes priced from $1 to $5 million nearly doubled. While listing inventory for the luxury segment — the highest 10 percent of all sales — rose sharply in contrast to the rest of the market. The loser in the surging market was affordable housing.
“For those who are already struggling to find anything affordable, it has only gotten harder,” said Jay Schneiderman, the supervisor of Southampton Town, counting teachers and nurses among those consigned to a longer commute to get to work in the Hamptons. “The entire work force is priced out.”
Dawn Watson, an agent with the Enzo Morabito Team at Douglas Elliman, agreed. “It’s harder than ever for ‘regular people’ to compete for primary homes — so many all-cash offers, bidding wars,” Ms. Watson said. “If something on the lower end of the market is good and priced right, it’s scooped up — sometimes in a matter of hours.”
More than a dozen offers were received recently at the first open house for a three-bedroom house in East Quogue, listed at $749,000. “Due to the sheer volume of interest, we held a sealed bid for best and final offers and it went into contract very quickly thereafter,” Ms. Watson said, closing in March for $900,000, or $151,000 over ask.
Houses priced at $600,000 to $700,000 two years ago are now $1 million, said Jennifer Wilson, an agent at Saunders Real Estate. When a new $1 million listing reaches the market, Ms. Wilson advises buyers to offer cash. “They can get financing, but they can’t make the deal contingent on that,” she said. “They can’t make it contingent on anything.”
The influx of wealthy buyers who have purchased homes in the $1 million range “are changing the complexion of the area,” Ms. Watson added, including a profusion of tear-downs, gut renovations and increased interest in land buys.
On the upside, revenues from a 2 percent Preservation Tax on Southampton home sales of $250,000 or more are up 40 percent over last year, Mr. Schneiderman said. Funds are used to buy undeveloped land to keep it open, and to buy development rights so farmers can continue to farm. “It has been very successful in terms of preserving our rural character,” he said.
The “silver lining” for owners of more modest homes who might want to cash out and take their windfall elsewhere, Ms. Watson said, is that it is “the time to sell.”
From April to June last year, Greg D’Angelo, a custom builder, leased his rental property — a small house with a pool on a postage stamp-size lot in Sag Harbor — for close to $80,000 to a family escaping the city. “That was our last hurrah,” Mr. D’Angelo said. In January, concerned that the Covid eviction moratorium could make it impossible to evict unsavory renters or squatters, he sold the house for $1.5 million. “It was the market that drove us to sell it,” he said. “I got crazy money for it.”
Though the market usually slows down before Thanksgiving and picks up in February, this year “we went right through the holidays doing deals,” said Gary DePersia, an associate broker with Corcoran. “A lot of inventory that was on the market for years is gone.”
On Shelter Island, a 10,000-square-foot gambrel-style house with a 150-foot dock on Peconic Bay closed for $9.1 million last month after sitting on the market, initially at $10.9 million for two to three years. “That’s a niche market,” Mr. DePersia said. “A rising tide lifts all ships.”
When the pandemic began, turnkey inventory sold quickly, said Joseph De Sane, managing director of Bespoke Real Estate. “Then people shifted to properties that needed renovation. When that was absorbed by the market, then it went to buying land or tear-down properties. We are going to see a busy construction market for years to come.”
While quarantining last year at their 2,400-square-foot East Hampton vacation home, Brooke Wall, 57, and Jason Cannon, 45, started house shopping. If the Chelsea residents were “going to commit to the Hamptons,” Ms. Wall said, they wanted a property they “really loved,” a house they would keep for a long time, convenient for Mr. Cannon to go fly fishing and surf.
“It is a tricky market because there are a lot of homes built in different time periods and people tell you the horrors of renovation,” Ms. Wall said. Driving through Amagansett, they noticed a real estate sign and called the agent, Martha Gundersen of Douglas Elliman.
“It turned out it was mainly land and there was an odd little cottage on the property,” Ms. Wall said, something they could use as a guesthouse. They purchased the 2.8 acre property in August, planning to build something they can use in both summer and winter. “Maybe it’s ambitious but we thought maybe it’s smarter to start from scratch than inherit something you would have to renovate,” Ms. Wall said.
On the Sag Harbor waterfront, Jay Bialsky, a developer, knocked down a ramshackle mansion to build three townhome condominiums, each ranging from 6,000 to 9,300 square feet, with two yacht slips apiece. The largest townhouse, with a brick facade, a rooftop pool and a contemporary glass back, is for his family; the others are listed with Bespoke for $24.9 million apiece, though one is about to go into contract. “It is urban living in the center of Sag Harbor,” he said.
Previous developers failed to get approval for denser projects on the waterfront property, but Mr. Bialsky’s plans were approved in part because he used brick facades on the streetfront to match the traditional architecture in Sag Harbor and he also agreed to sell some of the land to the town for a public park.
As part of his project across five contiguous lots, Mr. Bialsky demolished two vacant waterfront buildings and sold the parcels for $10.5 million to the Community Preservation Fund, which in turn created the 1.25 acre John Steinbeck Waterfront Park. Adding to the revitalization of the area, the Bay Street Theater, for the last 30 years located at nearby Long Wharf, subsequently purchased the building fronting the park for its new home, subject to village board approvals.
When the coronavirus arrived last year, Robert and Jessica Zecher decamped from the West Village to their East Hampton home. In September, they enrolled their daughter, Addison, 4, in a local preschool. Seven of her 13 classmates at the Country School also came from the city. Most of their families plan to remain out east next year; only one family has given up their Manhattan digs, Mr. Zecher said.
“People are emotionally and financially connected here now and that is not going to change,” said Mr. Zecher, a developer. “Having that escape hatch from Manhattan is not going to change.”
After delivering two spec houses last summer, earlier this year he went on a buying spree on 13 “super prime streets” in East Hampton village and Amagansett, upping his overall budget from $2 million to $30 million.
He bought a commercial building with eight apartments plus four residential properties, including a 3,000-square-foot house on 0.66 acre for $5.75 million, which he plans to tear down to build a larger and higher-end house.
“The uniqueness of the address is never changing,” he said, planning to build spec homes to “a custom-home standard” on the 0.4 acre to 2 acres lots. They will be for sale from $8.5 to $19 million in less than a year, Mr. Zecher added.
“Macro events such as 9/11 and the global financial crisis drove people out of Manhattan and they relocated to the Hamptons,” he said. “We are convinced the buying base has changed because of Covid. There are a whole host of families like mine that now call the Hamptons home.”
They are ordering hot tubs and installing in-ground trampolines and expansive outdoor kitchens with pizza ovens.
“The building industry has exploded and there is such a frenzy,” said Pam Glazer, a Southampton-based architect. “My phone has been ringing since last March, nonstop. Since every house became a pandemic haven, people are adding everything imaginative to their homes,” including a recital hall in a house in the Shinnecock Hills for a client who is a concert pianist, Ms. Glazer said.
Year-round living, however, has also raised some infrastructure issues. Ray Harden, an owner of Ben Krupinski Builder, said more people means more waste and strain on septic systems. With no public sewers, those building new or renovating more than 50 percent of their home must install a new low nitrogen septic system, about $24,000 for a three-bedroom house, compared to $9,000 for a traditional septic system, Mr. Harden said. (Suffolk County passed a law last fall requiring the upgraded systems.) He has also “received more calls about lifting a house and putting a basement underneath so they can put in a gym or a home office since Covid than in the past 20 years.” After all, everyone needs room for their Peloton. [Source: NYT]