It’s summertime in the Hamptons and from Westhampton to Montauk the focus is on fun. The real estate market shifts gears, slowing after the annual rush of activity that is the spring season.
Veteran Hamptons Realtor Paul Brennan, regional manager at Prudential Douglas Elliman’s Bridgehampton office, said the summer market relaxes as the focus shifts from real estate to revelry. Not all activity ceases, it simply is not as frenetic, he said.
The current market is even-keeled, with a detente between buyers and sellers in transaction terms according to Town & Country Real Estate President Judi Desiderio. The temper of the market will likely be short-lived as sales activity is expected to increase because of the fall buying season. Taken in combination with rising mortgage rates—still in the three percent range—and buyers sitting on the fence will soon be prompted to move.
Anthony DeVivio, managing director of Halstead Property in the Hamptons, said there has been the occasional bidding war for properties, but agreed the market is balanced and improving. As with the rest of Long Island, homes that are priced competitively are selling.
The sales uptick has lead to a steady rate of absorption. Factors dictating transactions include the difficulty associated with mortgage approval. Given the nature of the second home market, Desiderio said lending institutions can ask for as much as 50 percent down along with strong credit rating and income requirements. Those demands have slowed sales. Typically, lenders require at least 35 percent down for a second home as compared to as little as five percent for a primary residence. The mortgage rates on a vacation home are higher too. Loan stringency boosted cash purchases according to an April 2013 New York Times story, which noted 46 percent of second home purchases last year were bought outright rather than financed.
The result is a Hamptons market now seen as a strong long-term investment rather than a fast-flip environment. Home appreciation is expected to be slow and steady, which has stabilized the market. A second home in the Hamptons should be looked at as a long-term investment, on average anywhere from three to five years. If all goes well you could anticipate an appreciation of up to 10 percent annually over the next decade.
Given the volatility of the stock market, banks are charging next to zero interest and bonds have been given the thumbs down by the likes of Warren Buffett. With that in mind, the idea of investing in Hamptons real estate appears to be a good one. Now go enjoy the summer.