As people fled large population centers this spring, including New York City, in the midst of the coronavirus pandemic, it may not be surprising that one of the effects of the exodus would be a boom in the East End real estate market.
Industry professionals at an Express Sessions event last Thursday, August 6, said homes in the Hamptons were going like hotcakes, and they didn’t expect the surge to go away anytime soon — with some speculating that the market had entered a positive three-year cycle.
“I think we’re at the beginning of a three-year cycle,” said Ed Bruehl, an associate broker with Saunders & Associates. “We just got out of a yucky three-year cycle, right? Anyone who really knows what happened the last three years pre-COVID, it was slow. Slow and sloppy, right? And now it’s rocking through the roof.”
And further, the panelists on Thursday said the new homeowners were here to stay, making the East End their primary residence for the foreseeable future, and perhaps changing the South Fork landscape for good.
“People are realizing that now, that life’s short and everyone in one way or another has suffered losses over the past decade or so and decided that this was probably something, somewhere they want to stay,” said attorney Adam Miller, owner of the Adam Miller Group.
“I’m hearing that from clients multiple times a week, that they’re not returning.”
The virtual panel discussion, “The State of East End Real Estate,” was held via Zoom. In addition to Mr. Miller and Mr. Bruehl, the panelists included Paul Brennan, associate broker at Douglas Elliman; Jennifer Friedberg, associate broker with Brown Harris Stevens; Chris Nuzzi, senior vice president Advantage Title; Judi Desiderio, the CEO of Town & Country Real Estate; Mala Sander, associate broker with Corcoran; and Sharon Stern, associate broker with Sotheby’s International Realty.
The discussion was co-moderated by Express News Group Executive Editor Joseph P. Shaw and Features Editor Brendan J. O’Reilly, who puts together the newspaper’s weekly real estate section, Residence. The panelists were introduced by Express News Group Publisher Gavin Menu.
Here to Stay
The panelists all agreed that the recent increase in sales, due in large part to efforts to shelter from the pandemic, marked a potential change in the makeup of the community. Rather than clients looking for summer second homes, they are looking to make their East End properties their primary residences — even if they maintain homes in other areas.
“The people who were living here are living here and staying here,” Mr. Bruehl said. “And the people who want to go back are going to go back in the future, will still go back, but this will still be the primary home. I think that’s the big pivot that where the primary home used to be in the city, I think the primary home will be here.”
The largest percentage of buyers are New York City or Tri-State residents, the panelists noted, with fewer international buyers or home purchasers from other areas, due to restrictions from the quarantine — but there is still interest from those potential buyers.
“For the most part over 70, nearly 75 percent of our buyers come from New York City and the Tri-State area on a normal basis,” Ms. Desiderio noted. “I think that’s probably remained, if not kicked up a little bit more, but we’re finding buyers from all over. Even international buyers, people who feel more secure putting their money here than anywhere else.”
Mr. Miller agreed, noting that restrictions due to the pandemic have made purchasing a home on the East End more difficult for residents of other areas.
“We’re just challenged a little with quarantine,” he said. “So I have international buyers that are calling that would love to be here, but they can’t get here for 14 days with some of the properties that they’re interested in. I have people that are driving up from Florida that can’t see houses. So it is, for me, much more focused on the Tri-State area and people that can easily get here, New York specifically.”
And with the bump in sales and a sense of urgency to get transactions completed, acting quickly on the buyers’ part has become critical — especially with multiple buyers showing interest in individual properties.
“If you’re ready to be a buyer and you haven’t been burned yet, you’re going to get burned soon,” Mr. Bruehl said. “And then you’re going to be ready to act real quick. Cause you know, I think every single deal we have is three or four bidding on it. So that’s three or four people who are not going to win a deal. And then I have to look for something next week.”
“It is a time to know what you want and then to go get it once it presents itself,” Ms. Sander added. “So act decisively, know what you want, find someone that can find it for you and then act decisively.”
Ms. Desiderio added that prices are sure to increase quickly.
“The next set of inventory that comes up is going to be priced higher because the land values are going up, materials are going up, labor is going up. So the next set of inventory has to come in at a higher price,” she said.
The East End has become a safe haven for people to ride out the pandemic, the panel agreed, with prospective homebuyers looking to protect themselves and their families, but in a comfortable environment.
While in the past, buyers have had a desire to have a second home in the Hamptons, that drive has changed to a need to feel safe, Mr. Brennan said.
“The COVID has changed the definition of value from want to need. I think it’s more about people’s values that have changed … Dependent upon how people’s values have switched from want to need. It’s more about safety, it’s more about price, it’s more about school districts, it’s more about feeling that they can survive out here as opposed to the city.”
“I don’t find that people are so focused on what they were doing before in the city now at all,” Ms. Stern added. “They’re cooking at home. They’re Zoom gym class-ing. They’re doing all the things that they want to do in their homes. … I have never heard so many people speak about the pleasure that they are getting from their homes. And it gives real testament to what we offer here and why people are here.”
Mr. O’Reilly, citing a July list of signed real estate contracts on the South Fork, noted that sales of homes valued between $1 million and $4 million had more than doubled over the same period last year, and asked the panel how they accounted for that.
“Why do you think it is that that particular segment of the market is so popular?” he asked. “Does it say something about who the buyers are that are coming out here right now? Does it say something that there are people that they’re not going to buy the eight-figure house on the ocean, but they want to come out here, and they want to do their job from the East End, and they want to do it comfortably with their family?”
“So, $1 million to $4 million is obviously a very different thought,” Ms. Friedberg noted. “In terms of what buyers are looking for, if you take a [buyer in] general, they want space for their family inside and out, they want gyms, they want offices … There are significant demands for a full-time house versus a summer home, and I think that’s what we’re really seeing right now.”
After 9/11, East End home sales saw a bump as well, as New Yorkers left the uncertainty of the city and sought refuge on the South Fork and other parts of Long Island. But for the most part, with some exceptions, the trend reversed itself as people began to feel safe in city again and returned to their primary residences.
While there are some similarities, many of the panelists agreed that the current crisis may be different, that because of changes in technology allowing people to work remotely, changes in attitude and values, and a growing appreciation for what the East End has to offer, people will choose to stay.
“It’s sort of like akin to what happened at 9/11,” Ms. Sander said. “During 9/11, there was a lull, there was nothing that was going on. And then two weeks later, the phones started to ring and everybody wanted to get out of the city and come out here for what they thought was going to be temporary, just until things got settled back in. But this is the East End, it’s such a very special place to live. I think people are finding that the school system is great, the agricultural nature of our community, the farm-to-table nature, the beaches, the fresh air, all of those things, people find it very hard to leave after a while. And now with offices maybe closing, and with less and less reason to not work from home, people kind of say, ‘Okay, why am I going back?’”
Two of the panelists, Mr. Miller and Mr. Bruehl, relocated to the East End following 9/11 and remained.
“After being out here and realizing that there’s so many different aspects of living out of here,” Mr. Miller said, “the biking community or surfing community, you have a golfing community. You have just so many things to do that are not all that obvious until you spend more time here and then get involved in whatever it is that you want.”
While Ms. Desiderio predicted a strong bounce-back in the city, she did note that it’s not as critical as it has been in the past for businesspeople to rush back to the city after a weekend on the East End.
“Working remotely is way more accessible than it was after 9/11, so the amount of people who decide to stay out here, more of the week than they did before, is probably much greater than it was after 9/11,” she said.
“But this city is not dead. It is still the financial capital of the world, and it will come back,” she added. “It will take a few years, but just like after 9/11, it will come back.”
So what will the effect be of a post-pandemic bump in the South Fork population, as the growing number of full-time residents start to tap the local resources? The panelists agreed that local municipalities and school districts need to start planning now. They noted that the increase in sales — and a subsequent increase in property values — would only make the East End’s affordable housing crisis worse.
“Forward thinking from there is we need to resolve more children moving in. So how are we dealing with this in the school systems and the roads and the infrastructure?” Ms. Desiderio asked. “This is a big discussion that the municipalities need to sit down and start having with one another, but it needs to be resolved because we’re now soon going to [be a bigger] post-COVID world. And the post-COVID world means our population is going to at least be up by 35 percent to 40 percent.”
Mr. Bruehl added that he hopes the new year-round population will get more involved in local politics to address the issues.
“Now I’m hoping this year-round community gets more people to sort of participate in local politics, but also prioritizes the need, not the want,” he said. “There’s a genuine need now, we have an affordable housing need now. … I think we need to address this very seriously, not hope it all gets better, but start taking it serious.”
Mr. Nuzzi, a former Southampton Town Councilman, when asked why there hasn’t been more forward motion on the issue of affordable housing in the past, noted that it is a complicated issue that has a lot of considerations.
“I think it has to do with just the balance that people want to strike,” he said. “I do genuinely believe that elected officials, today and yesterday, and people in the community want to see that balance of a community and are concerned about it. But when it comes to balancing that with the character of the community, the environmental character, the open spaces that people know and love, it becomes really difficult to make some of the decisions.”
Mr. Miller urged the new full-time residents to get involved in the community and help shape the future of the South Fork for the better.
“One of the great things I think that people will realize in being out here is that you really can effectuate change so much more tangential than you can in the city. I think it’s important for those people to realize that to make this a long-term play for them in living, there has to be involvement. These things aren’t just going to happen by sitting back and hoping.”