Last year, with unpredictability in Washington and on Wall Street, real estate on the East End took a hit — but industry professionals are confident in 2019, especially when it comes to Sag Harbor.
The Express invited a slate of local experts to discuss residential real estate issues and trends. Included in this feature are:
John Wines, licensed associate real estate broker with Saunders & Associates in Southampton; Georgiana Ketcham, licensed real estate broker and owner of Georgiana B. Ketcham Real Estate on Shelter Island; Geoff Gifkins, Hamptons-area regional manager for Nest Seekers International Realty of Nest Seekers; Judi Desiderio, chief executive officer of Town and Country Real Estate in East Hampton; Simon Harrison, principal broker for Simon Harrison Real Estate Brokers; Jessica von Hagn, licensed real estate salesperson with Brown Harris Stevens of the Hamptons in Sag Harbor; Enzo Morabito, a licensed associate real estate broker with Douglas Elliman Real Estate in Sag Harbor; Mala Sander, associate broker with Corcoran Group in Sag Harbor; Jon Barton, licensed salesperson with Sotheby’s International Realty in Sag Harbor; and Scott Strough, associate broker with Compass in Sag Harbor.
Here is what they had to say.
The Sag Harbor Express: What is your general feeling about the real estate market in and around Sag Harbor?
John Wines: The real estate market in and around Sag Harbor is, like many other areas across the nation, a little soft right now. That’s not to say, however, that it is destined to struggle in 2019. Many quality properties were sold in Sag Harbor during the past year and there are good economic indicators still in play at the national level. If the uncertainty in Washington ends and Wall Street is on a good track, price appreciation and the pace of sales should pick up. It’s also worth noting that Sag Harbor continues to enjoy a stronger demand relative to many other areas of the Hamptons.
Georgiana Ketcham: Over here on ‘Fantasy Island [Shelter Island],’ we are very busy with sales and rentals for summer of 2019.
Geoff Gifkins: We saw a dip in sales last year, but every market has its cycles with peaks and troughs. Take the headlines with a grain of salt. In these micro real estate markets, any one large transaction, or the lack thereof, can greatly affect the results. Both buyers and sellers should look at the broader picture and historical data. Sag Harbor has consistently performed well and will continue to so.
Judi Desiderio: Sag Harbor real estate took a breather last year, but for 2019 we see more inquiries in all price ranges. Sag Harbor remains the most vibrant village in the Hamptons.
Simon Harrison: We have the same pipeline of buyers and sellers in dollar volume and unit sales, but the fall market was off.
Jessica von Hagn: We have not been immune to the recent slowdown that has been witnessed in other markets — whether we blame recent tax changes, Fed rate hikes in 2018, recent market volatility and higher inventory levels. 2018 was a transitional year. The slowing transactions led to pockets of lower prices. With that said, there is still an insatiable amount of demand out there for Sag Harbor and surrounding areas at the right price. I am very optimistic about the Sag Harbor market in 2019.
Enzo Morabito: We feel very, very strongly about Sag Harbor, more so than just about any market. The mixture of different price ranges gives Sag Harbor a dynamic that no other town has, which is extremely positive. We are moving my team’s east-of-the-canal office from Bridgehampton to Sag Harbor this coming week — that’s how much we think of the Sag Harbor real estate market!
Mala Sander: It’s a buyer’s market, which translates to opportunity for smart buyers. Certainly it’s a lot less volatile than the stock market!
Jon Barton: I’m feeling very confident about the Sag Harbor real estate market. Since January 1, 2018, there have been approximately 225 closings in the Sag Harbor School District — roughly one every working day. There are about 23 listings currently in contract in the area, totaling over $50 million, so we’re off to a great start in 2019. Sag Harbor’s unique Main Street culture has become a hub of normalcy in “The Hamptons,” and I think visitors and locals increasingly appreciate contact with local business owners.
Scott Strough: I believe the Sag Harbor real estate market has entered into another cycle of strong demand and sustained price increases, especially long term. Sag Harbor remains the crown jewel of the Hamptons.
What trends did you see emerge in the Hamptons overall last year?
Wines: One obvious trend that persisted in Hamptons real estate last year was that properties had to be realistically priced in order to sell. Properties that were priced aggressively with high expectations, in most instances, languished. To that end, many properties traded only after significant price reductions. Not surprisingly, sales under $2 million remained strong throughout the Hamptons. At the same time, we also saw a trend toward downsizing. My son and I represent the condo units at Harbor’s Edge in Sag Harbor Village. We sold several units this past year to buyers who were downsizing from large homes. An increasing number of buyers want a simpler, hassle-free Hamptons living experience. This trend has been so popular lately that we have only three new units left at Harbor’s Edge, out of the 15 original units that were built.
Ketcham: The usual same old, same old: five outfit weekends with fundraisers and a growing interest in the arts and theater industry. More local participation.
Gifkins: In Sag Harbor 2018, we saw a resurgence of high-end village renovations. It is a trend we expect will continue as more buyers are gravitating to high-end renovations with the convenience of being in close proximity to Main Street. Location is key. Buyers are also preferring turnkey solutions, either new builds or completely renovated historical homes. We are also seeing a trend to downsize, which makes these village locations so appealing.
Desiderio: Price recalibrations — prices had shot up too quickly for buyers’ absorption.
Harrison: We saw more people polarizing at brand-new houses and teardowns. The inventory priced in the middle got less attention.
von Hagn: I am watching buyers, more often than not, opt for the new construction or turnkey homes and shy away from projects and outdated homes regardless of location. They are buying newness for convenience at the expense of location. I am not a proponent of this. I always recommend to buy the location, and you have the rest of your life to fix the house.
Morabito: Really simple: If you want to sell something, it’s all about pricing. You need to price to market, otherwise it’s a waste of time for everyone involved. If your home has been lingering on the market for years, you are most likely overpriced.
Barton: I have noticed a diminished sense of urgency from buyers in the last year. As the Manhattan luxury market deals with an image of oversupply, the New York City buyer brings that expectation of a discount and seems increasingly skeptical of Hamptons prices. Some overpriced sellers are becoming more realistic, and some continue to wait for the market to improve. However, there continues to be strong demand for a well-priced property.
Strough: One trend that has come back with energy is the architectural design of the flat roof modern design. Obviously, this is not accepted in the historic district of Sag Harbor, but throughout the Hamptons we are seeing much more of its influence in new construction. Also, the desire to renovate and find those older projects to work on is always trending.
What trends are you expecting to continue in 2019? What do you think could change?
Wines: Right now, there are some obvious headwinds from the economic uncertainty brought on by global trade tensions, stock market volatility and the government shutdown. Rising mortgage rates, high asking prices and low inventory in desired market segments have stifled sales activity a bit, both nationally and locally. It’s certainly possible these trends could continue during the early parts of 2019; however, it’s also possible that great clarity could emerge from Washington that spurs new gains on Wall Street and filters down into our real estate market.
Ketcham: Cannot think of what could change — many sightseers, actually basically more day-trippers, in spite of the traffic situation. We are the bridge to the Hamptons and my office is on 114, so I expect more traffic. Also, the North Fork has become quite the day-trippers delight.
Gifkins: It doesn’t have to be huge. Buyers are looking for quality, functionality, low maintenance and lifestyle. Expect some radical designs this year and some very innovative homes.
Desiderio: Buyers are out here looking for “bargains.” Since Sag Harbor will always have a finite amount of inventory, those buyers may find that while the sale prices have moved toward them, there are enough buyers to keep prices solid. Thankfully, Sag Harbor can never be overbuilt.
Harrison: The values in the middle ranges are compelling. Real estate by the pound is what I say, suggesting the market might renovate more than build brand new to absorb the trapped value in these investments.
von Hagn: Sag Harbor Village is on trend and will continue well into the future. No town has more year-round activity, restaurants and entertainment. Try finding a parking spot on Main Street on any Saturday in January. Shocking how year round it’s become — what a special place.
Morabito: It has become a buyer’s market and the best way to convert a buyer’s market into a seller’s market is by pricing your property properly.
Barton: I think buyers at all levels of the market will continue to expect a competitive price before they even go look at a property. I think the difference in 2019 will be that more sellers will take another look at pricing when trying to figure out why their property hasn’t sold.
Strough: Looking forward in 2019, I believe the market will continue to have older homes and properties in need of repair get picked up by buyers at reasonable prices. New construction, although modern amenities are a must, may see some pullback from the ultra-modern design.
Is real estate in Sag Harbor aligned with those trends?
Wines: A great deal of what happens in the Hamptons real estate market reflects how the overall economy, and especially Wall Street, performs. That said, well located and appropriately priced properties should continue to move. Similarly, the under $2-million range should stay strong. Unless the economy is extremely robust, spec building may continue to slow a bit this year in many markets as inventory languishes. Turnkey properties should continue to be in strong demand and, aside from a few exceptional properties that command above-market figures, prices overall should remain relatively stable.
Ketcham: Absolutely, I am one of those day-trippers!
Gifkins: Sag Harbor has always been very progressive. It is a unique hamlet, the only one with a luxury yacht harbor, a vibrant central business district all year round, and is at the epicenter of the Hamptons in terms of location — although Sag Harbor follows the general trends.
Desiderio: Yes, we are in more of a balanced market now.
Harrison: Sag Harbor sets the pace, thank you very much.
von Hagn: Yes. More and more, I sell homes to buyers looking not just for a summer home but a year-round weekend getaway. Sag Harbor is viewed as a year-round destination and no place in the Hamptons has more to offer in the off-season.
Morabito: We feel that Sag Harbor is right at the cusp of being the frontrunner in all price ranges.
Barton: Yes, Sag Harbor is no exception to market forces. Mostly, Hamptons sellers don’t feel a strong financial need to sell and, in a luxury second home market, buyers don’t need to buy. So we wait, sometimes for a year or two. That’s why the rental market is so strong — a hedge against the fear of overpaying.
Strough: Yes, real estate in the Sag Harbor market is definitely a hotbed for the project buyer. The challenge is finding the right project and making the math work. As far as architectural trends, Sag Harbor Village will constantly be an area where developers and homeowners must adhere to the historic governance of the National Registry. I’m actually a big fan of the Architectural Review Board, as it holds a big responsibility to all of us who love Sag Harbor.
What are prospective buyers looking for right now? What are they shying away from?
Wines: A significant portion of prospective buyers on the South Fork now wants turnkey properties. The vast majority of these buyers do not want to deal with major building or renovation issues. To build or renovate a home on the East End can be a long and arduous experience. Most of the current buyers in the Hamptons are looking for a vacation/second home and do not want to wait two or three years to go through the approval and construction process.
Ketcham: Actually, they are shying away from the mega-mansion waterfront homes to the more comfortable home that is easy to manage. Most of our buyers are young and active in all kinds of sports, so comfort and manageability seems to be the trend.
Gifkins: Definitely value and the price has to make sense. For second homebuyers, most prefer turnkey solutions, either fully renovated or new construction. Most simply don’t have the time or patience to renovate or build. We are also seeing a resurgence of smaller, quality home sales — as many are opting for quality and convenience over size — and we expect the central village purchase trend to continue.
Desiderio: Sag Harbor is famous for its history, as well as its gorgeous waterfront. Those demands remain most revered.
Harrison: Village houses. Noyac has variety and a lot of houses, North Haven is still well considered.
von Hagn: Buyers want unique, special, pretty homes — whether location, look or feel. Anything large and outdated is extremely tough to garner interest. Sellers seem to want to downsize property and house size.
Morabito: Properly priced properties — a good deal — and they are shying away from overpriced listings.
Barton: Buyers today expect a move-in ready home — and they’ll pay for it. There doesn’t seem to be a lack of money. Sag Harbor buyers are mostly very smart business people and professionals who want to relax when visiting. They don’t want to deal with the perceived risk of lost time spent on permits and renovations.
Strough: Prospective buyers are looking for location, price and fitting into their desired quality of life. The quality of life metric has become more important, as we are seeing more people retiring out here or downsizing to become more comfortable financially. Buyers avoid over-priced properties. Buyers are much more educated to pricing and market conditions from all of the tools found online.
What advice do you have for sellers looking to put their houses on the market right now?
Wines: It is important for sellers to be realistic about both the price strategy and the time it will take to market and sell their property. If a property is overpriced relative to recent sales, then it will likely languish on the market and can become “stale.” Eventually, such a property may sell only after significant price cuts. And even with appropriately priced properties, sellers still need to be patient in this current market. For all but a select number of properties, the sales process can take quite a while.
Ketcham: Lots of things, but basically, price it right. Some customers want a fixer upper and some want to move in with toothbrush and coffee cup. All documents for a closing must be in order when I take a listing — do not want any last-minute glitches.
Gifkins: Take the time to study the market. Knowledge is key. Compare your home with those on the market and those that have sold. Don’t take the highest list price unless you can justify it, otherwise your house will not sell without numerous price reductions and a lengthy time on the market.
Desiderio: Knowledge is power. Know your available comps, as well as your sold comps. Your broker should help you prepare your home for optimum launch.
Harrison: Steve Ross of Time Warner fame told me not to try and time the market, as life is too short. If you are a seller, a three- to six-month timeframe should bring out all buyers, and don’t be afraid of pricing it closer to the market. You’ll have a better chance of attracting multiple buyers and mitigate risk of it being a stale listing with price drops and incentives.
von Hagn: Look closely at what other buyers in the same price point are going to be looking at and price competitively. Don’t expect buyers to always see the vision. Try and lay it out for them. It’s always important to de-clutter, paint, stage, or set the space. As in life, you only get one first impression.
Morabito: Give me a call and let’s talk about accurate pricing and working with a professional listing team.
Sander: One, make sure you are pricing to the market. The days of aspirational pricing are well behind us. Two, prior to listing, it’s a good idea to have your home inspected by a professional, so you can address any maintenance or needed repairs, avoiding interference with a prospective sale.
Barton: January is a great time to list your property! Likely, buyers are looking for a property they can close on and personalize before the warmer months arrive. As always, I advise my clients to over-clean and de-clutter their yards and interiors. Pay attention to the small details that make a home shine — a new front door handle, or kitchen and bath faucets. Fix their window screens and clean the gutters. They should pay attention to lots of small details instead of, for example, expanding the house footprint.
Strough: Sellers who have decided to put their property on the market must adhere to the number one rule of selling: presentation. Make sure the home is clean, yard clear and landscaping updated and, most importantly, the home up to code with all of the required municipal codes, as buyers will ask for an updated Certificate of Occupancy at closing. Buried oil tanks are also a required fix by the seller, as buyers will not assume any liabilities of an older tank.
What advice would you give to buyers?
Wines: Be prepared for sticker shock. We find that many prospective buyers in the Hamptons enter the process with a certain price range in mind, and then are surprised when the quality and features available do not match their budget. Another piece of simple advice for buyers is to take some time and really get to know the area outside of the specific home shopping process. Each community has a distinct set of qualities that can be tough to experience during a quick property tour. And one final piece of advice for buyers is not to be afraid to make an offer. It is not uncommon for sellers to price a property outrageously high with the expectation of negotiating down. Making an offer, even if it seems somewhat low relative to the asking price, can start a dialogue that eventually results in a deal. Of course, a skilled real estate agent can help buyers navigate that process.
Ketcham: Be qualified, know your budget, and let’s just take a look! And find out what you really want — and need to be comfortable.
Gifkins: There is a lot to see. Take your time. Educate yourself on the market to make an informed decision. Don’t focus on the best deal; understand that, in most cases, you will be living there for a while and that best deal may not bring you joy or suit your lifestyle. To help the process, it’s imperative to work with a knowledgeable broker you trust that really knows the local market and this area.
Desiderio: Have your financial picture in clear focus and be prepared to pounce.
Harrison: Call a well-trusted resource, and learn the market bracket. That way you can be efficient with your time and narrow to a shortlist quickly. I’m a well-trusted resource.
von Hagn: Partner with a good, experienced agent, and do not be afraid to engage with an offer. I can’t tell you how many times I have had buyers kick themselves when they heard what a property ended up trading for. If you and your agent think it’s overpriced, there is a very good chance it is. Also, don’t be scared of the ugly duckling. You will be shocked how with a little vision, the right contractor and some patience, you can really create value and something special.
Morabito: Do your homework! If you’re a speculator, you can buy it and wait. If you’re a homeowner, you can buy it and enjoy it. And, remember, it’s an investment.
Sander: Be flexible — understand your must-have needs versus what would be nice to have. Opening the aperture a bit in this way will get you the most likelihood of getting a great deal.
Barton: Buyers have so much information these days, but there is no replacement for working with a good real estate agent. Find an agent you believe in and stick with them. Successful real estate agents often have decades of experience and are aware of the details of specific properties, even before they go on the market. Most buyers can find a good deal in today’s market, but the right agent can find you the right good deal for your specific needs.
Strough: Buyers need to understand the velocity of the Hamptons and the marketplace. If they find a property interesting, you can bet that there are others also looking at the property. There is too much money and too many players constantly looking for deals. Be decisive and move efficiently.
In terms of rentals, is there still a viable year-round rental market, or has it largely become seasonal?
Wines: It is no secret that the Hamptons has a large number of seasonal residents. That said, there is still a strong demand for affordable year-round rentals from local storeowners, employees, teachers, et cetera.
Ketcham: Shelter Island is always busy in both markets — people moving in, out, up, down, depending on their lifestyle, which these days seems to be changing hourly.
Gifkins: Most have become seasonal — there is less wear and tear on the home, the income for a short period is higher. Those that are available year round are commanding higher prices.
Desiderio: These are two different demographics. Year-round demand is on the low end, seasonal on the high end.
Harrison: Seasonal rentals have changed a lot over the past five years, and we don’t do vacation rentals of four days or 11 days. But a month, a season, a year, we are still effecting those. The year-round market is sparse, and limited, but we still do them.
von Hagn: There is a tremendous amount of demand for year-round rentals. Demand is always here, it really is an inventory and price issue.
Morabito: More and more people are coming out over the “off season,” especially in Sag Harbor where the village is always active. I love it!
Sander: There is most definitely a year-round rental market now.
Barton: There is a strong year-round rental market, especially in Sag Harbor’s very competitive school district. Prices have sharply increased over the last few years, so it’s hard to find an affordable clean home here. Base prices for a three-bedroom, two-bath rental close to the village begin at around $4,000 per month and go quickly. However, renters often pay $6,000, or $10,000, or more per month for the right location.
Strough: The demand for year-round rentals is very strong. The problem is limited inventory and, again, high rents are oftentimes disappointing to potential tenants. The success of the Sag Harbor School District has increased year-round demand for families looking to get children into the district.
Is there a reasonable inventory of rentals available for year-round residents?
Wines: Like many other parts of the nation, affordable year-round rentals on the South Fork of Long Island are quite scarce. The upward pressure on property values has impacted year-round rental prices. Also, many properties that were once available for rental have since been purchased as second homes, so the inventory of available properties is low. This, in turn, further drives rents upward.
Gifkins: No, there are not many and when they come on, they rent very quickly — especially the more affordable ones. It is a problem and one that continues to escalate across the East End.
Desiderio: No. All East End municipalities must change their thinking of mother-daughter apartments and rentable accessory structures. This will help augment income for both the young and old. Communities need both.
von Hagn: At a price, yes. The issue is the price. The summer rental premiums are obviously included into the annual price. For many year-round residents who are working in the area, rents are unfortunately unattainable. Lack of affordable housing has been an issue here for a long time, and it gets worse every year.
Morabito: No, not as much as the summer.
Sander: Year-round rental inventory is tight. There’s strong demand.
Barton: No. I just looked for a friend who can spend $4,000 per month and there was only one location currently available.
How about rental prices — what sort of trends do you expect to see in the coming year?
Wines: Seasonal rentals now are different than they were in the past. Traditionally, the seasonal rental ran from Memorial Day to Labor Day. In recent years, however, many owners only want to rent their homes for part of the season. While these owners still want income from the rent, they also want to use the property during a portion of the summer. In other instances, prospective tenants find the full-season rentals too expensive and have resorted to renting for shorter terms, such as two weeks or a month at a time. As such, partial-season rental prices should stay strong. Full-season rents for all but the best of the properties, on the other hand, may very well be a bit softer.
Gifkins: Rental prices have become more negotiable over the last few years and many renters are opting to take shorter periods rather than the full summer. Location and amenities are key, competition is very intense, so owners need to take the time to prepare their homes for rental.
Desiderio: Fairly stable. There hasn’t been significant change.
Harrison: We expect the same as last year with very few increases.
von Hagn: I would expect a flat season in regards to pricing, but with a slow transactional season last year, there will be plenty of demand this year. December was absolutely brutal for many on Wall Street and bonuses did suffer slightly. There has historically been a high correlation between Wall Street bonuses and rent prices.
Morabito: I see a lateral move with rentals.
Sander: Rental prices seem to be holding. While there is increased rental demand, it’s being matched by increasing rental inventory.
Barton: As uncertainty in our political and economic worlds continues, the rental market seems to be safe in the Hamptons. So, unfortunately I would expect rental rates to continue to increase.
Strough: Summer rental prices will continue to perform with demand remaining strong. People love this place and the summer in the Hamptons remains a desired destination. We are blessed to live here.