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East End Real Estate Market Rebounds in 2013; High Hopes for 2014

Posted on 17 February 2014

By Kathryn G. Menu

 

Numbers don’t lie. And according to the numbers, the East End real estate market showed significant growth in 2013. And speaking with a number of executives and brokers from the most lauded real estate firms in the Hamptons, 2014 is poised to be another year of growth, with Sag Harbor and North Haven, in particular, seemingly unstoppable markets.

“All areas saw enormous activity,” said Caroline Sarraf, a licensed real estate broker with the Sag Harbor branch of Brown Harris Stevens. “Sag Harbor is ‘on fire’: many great houses quickly went to contract. Anything new on the market, if priced right, will sell. It’s a slice of heaven, a piece of property with a historic home in one of the most beautiful and lively towns in America.”

“Sag Harbor continues to be very popular, with very strong sales, and the shortest days on the market compared to other areas,” agreed Geoff Gifkins, Hamptons Regional Manager for Nest Seekers International.

“Good inventory just does not last,” said Ernest Cervi, executive managing director with The Corcoran Group. “It is a very sought after place. The village is surrounded by water, it’s a quaint village and it gives you a feeling of going back in time. It’s different from any other place out here.”

Indeed, the sales numbers from 2013 for the greater Sag Harbor area were impressive. According to George Simpson of Suffolk Research Service, Inc., the total number of single-family home sales in the 11963 zip code, which includes Sag Harbor Village, North Haven and Noyac, increased 35 percent in 2013 with 317 units sold — including 94 in Sag Harbor Village alone — up from 240 in 2012. Total dollar sales in 11963 increased nearly 41 percent, according to Simpson, to roughly $424 million, up from $301 million in 2012.

Michael Daly, an associate broker with Sotheby’s International Realty’s Sag Harbor office agreed Sag Harbor appears to be one of several villages with a strong showing in 2013, but noted across the board sales have been robust.

“The incorporated villages of Southampton, East Hampton, Sag Harbor and Sagaponack appear to have seen the greatest uptick, with average selling prices increasing over 2012,” he said. “Amagansett, North Haven and Bridgehampton followed.”

“Sagaponack saw a larger share of high-end sales in 2013 than any other hamlet or village, but people are also looking to Montauk and Westhampton/Quogue where prices are relatively more affordable,” said Dottie Herman, President and CEO of Douglas Elliman Real Estate. “Really, the Hamptons market as a whole is very healthy.”

According to Suffolk Research, total dollar sales in Bridgehampton (11932 zip code) increased nearly 41 percent to just over $397 million, up from about $223 million in 2012 based on 102 unit sales, up from 76 in 2012. Total dollar sales in Sagaponack increased 23 percent to roughly $274 million, with other areas on the East End seeing similar growth.

“Montauk experienced the greatest increase in the number of home sales at 54 percent year to year, but it was Southampton Village that knocked it out of the park in total home sales volume with a 62 percent leap to $507 million,” said Judi Desiderio, the CEO of Town & Country Real Estate.

Desiderio said 2013 yielded 26 percent more home sales throughout the Hamptons (1625 in 2012 to 2055 in 2013) and a 22 percent increase in total home sales volume, adding that the greatest gains her firm tabulated were in the $500,000 to $999,000 range and the $1 million to $1,999,999 range — both realized a 35 percent increase.

“The last quarter of 2012 kicked off a frenzy of buyers very focused on locating a property quickly and getting to contract before getting outbid,” said Sarraf of Brown, Harris Stevens. “In 2013, anything priced accurately went to contact within a month or less, many buyers locking in their deals at full ask with no contingencies, or above asking price.”

Sarraf said the $1 million to $1.8 million homes had a tremendous amount of activity, as did the highest end of home sales, those priced at $10 million to $20 million.

“We have seen growth in all sectors last year, but most significantly new construction [in the] $2 to $5 million range,” said Gifkins of Nest Seekers. “The success of the high end luxury condo complexes in Southampton and Sag Harbor show the trend for consumers looking for turnkey low maintenance options in the area.”

“I think there have been a lot of people sitting on the sidelines for a while now and they are seeing properties are now being sold at all price points,” said Cervi of Corcoran. “People are also seeing mortgage rates going up and realize it’s a good time to step up and take the plunge. With economic indicators being positive real estate is also being viewed as a solid investment again.”

“I think we are looking at a well balanced market,” he added. “In the fourth quarter of 2013 the number of sales that took place in the $1 to $1 million range made up 78-percent of all sales. That is saying entry level homes are selling, and also that investors are picking up properties and putting them on the market, which is a sign it is a quality market.”

Daly, of Sotheby’s, noted that he believes the real estate community has also become better at advising sellers as to the true value of their home early on in the listing process, which aids overall sales.

“It appears as though the gap between buyer and seller narrowed in 2013 with buyers feeling more comfortable that values were not going to fall any further and sellers getting more motivated to sell,” he added.

While Daly concurred it was homes $1.5 million and under that sold the most in 2013, at the end of the year residences “into the mega millions took off like a rocket,” he said.

Herman, of Douglas Elliman, said prices had already rebounded within a year of 2013, and had essentially moved sideways over the past three years, although she allowed that sales did see a jump at the end of last year.

“In terms of market share, we saw the largest percent increase in the $3 million to $5 million segment,” said Herman. “We experienced some pull back in the $5 million plus market and stability in the sub $1 million [market].”

“New construction and perfectly renovated homes were in high demand,” said Sarraf of Brown Harris Stevens. “Most buyers say they are willing to do work but when they see a great home, perfectly detailed with considered interiors and landscaping, they fall in love.

“Land is always a great idea if you have the time and stomach for the project from the ground up,” she added. “I think the tax savings alone is a large incentive and being able to say, ‘We/I built this’ is a great feeling for city dwellers coming east for a second home.”

“Land is growing increasingly scarce,” said Desiderio, of Town & Country, noting builders are tearing down existing homes and building new houses at greater rates than improving vacant land. However, she added that is “solely because there’s such little land.”

“On the East End with preservation initiatives, and a limited amount of buildable properties, prices will be on the rise,” said Gifkins of Nest Seekers about land sales. “Land sales have been very strong, and we have seen many investors and new builders entering the market over the last 12 months.”

“Find it and it will be sold because it is in short supply,” said Cervi of Corcoran, noting developers started snapping up vacant lots a few years back.

“Land was stagnant for awhile with a few developers buying much of the available inventory during 2008-2012,” said Daly of Sotheby’s.

While in demand, Daly said buyers would not overpay for vacant lots.

According to Herman with Douglas Elliman, the market is showing continued momentum into 2014.

“Aside form the harsh weather conditions holding back property showings, sales momentum from 2013 carried into the New Year,” she said.

“This is the busiest January for all eight Town & Country offices since 2005,” said Desiderio. “Since the numbers aren’t in yet, I can only go by our activity and it’s quite strong.”

“We had a record month in January,” said Gifkins of Nest Seekers. “Both sales and rentals were very strong and we expect 2014 to be an epic year for real estate out here.”

“We had activity throughout the holiday season,” said Cervi of Corcoran. “January was a little less because of the weather. Usually the second quarter is where we see a lot of activity and then again in the fourth quarter when the season is over.”

“Weather has played a role in dampening January business a bit,” said Daly, “But it is still stronger than expected. Most conventional thinking about ‘seasons’ is outdated today. Markets change every 30 to 60 days and we need to stay focused to advise our clients intelligently.”

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