Just a few months ago, Hamptons 2nd home-hunting was an elitist’s dream. Home sales were surging (highest sicne 2007’s peak) even as home prices soared (in the face of bad weather and economic angst). But that has all changed. As Bloomberg reports, sales of luxury homes in the are have tumbled 16% YoY in Q3, prices have plunged 18% YoY, and inventories are surging (up 34%). The reason is simple, as one realtor notes, “the international buyer has been absent.”
Mid-Summer, The Wall Street Journal could not be more excited about the bubble in Hamptons’ homes…
As the peak spring season for home sales begins, the market across the region is showing considerable strength, especially in the Hamptons, with its deep pool of affluent summer-home buyers.
Despite frequent winter storms that snowed in many Hamptons properties on the eastern end of Long Island, the number of sales from January through March was the highest during any first quarter since 2007—during the last real-estate boom, market reports show.
But, it’s all changed… (as Bloomberg reports)
New Yorkers who want to buy a high-end retreat in the Hamptons have plenty of options to choose from.
Sales of luxury homes in the area, known for its beachside mansions attracting financiers and celebrities, tumbled 16 percent in the third quarter from a year earlier to 52 transactions, according to a report Thursday from appraiser Miller Samuel Inc. and brokerage Douglas Elliman. The inventory of such properties — defined as the top 10 percent of the market by price — climbed 34 percent to 292.
Wealthy buyers on Long Island’s East End are taking a pause after several years of heated sales, leading prices to fall as more houses come to the market. The median price of Hamptons deals completed at the luxury level dropped 18 percent from a year earlier to $5.3 million, in contrast to an increase for lower-cost homes.
“People who had the cash, they came out and bought the last couple of years so they’ve kind of leveled off,” Dottie Herman, chief executive officer of Douglas Elliman, said in an interview. “They’re still here, but the demand has just gotten flatter.”
With many Hamptons luxury buyers employed by the financial industry, the sales drop may have been tied to declines in global markets, said Ernest Cervi, a senior vice president at brokerage Corcoran Group who oversees Hamptons sales. The Standard & Poor’s 500 Index sank 6.9 percent in the quarter, the worst performance in four years, while currencies and commodities also slid.
“There was a lot of turmoil on the financial markets around the world and that might have stopped people from pulling the trigger,” Cervi said. “The international buyer has been absent.”
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Who could have seen that coming? A bubble in luxury real estate driven by 1%-er equity gains and a desperate outflow of capital from various “growth” countries around the world suddenly collapses when stocks stumble and those nations introduce capital controls.