Business magazines treat residential real estate as if it were just another business. Looking at markets, figuring which are fair value, which are overpriced and which are undervalued has becomes a standard magazine feature in the past year or two. And not just in the business publications. You’ll find it in consumer magazines, style magazines, on websites and in blogs.
The interest is there. They wouldn’t be publishing it if people weren’t reading it. Real estate news, like celebrity watching, is an addiction. Only real estate voyeurism has a respectable veneer of business or lifestyle news.
A current CNN Money.com article is typical. Titled “Most Overpriced Home Markets,” it ranks various cities and tells us “where the bargains are.” Like almost all similar articles, the information is based on what a market research organization compiles. In this case, Santa Barbara was the most overpriced, and a few places in Texas and North Carolina that you barely know of were the bargains.
I’m not sure how people respond, if they actually base decisions on such information. I don’t know if my reaction was typical. I’d choose a nice, overpriced house in Santa Barbara any day over a hot deal in McAllen, Texas.
The Hamptons never gets on those lists. It is not geographically discreet, and does not lend itself to computer analysis. You have to rely on your real estate agent for market news, but how objective is that? Doesn’t the story for the buyer have a little different tone than the story for the seller?
Then there are the commentators—like me. Do we know what we are talking about? Do we have to know? After all, we are not market researchers, we are pundits. We need to know some facts and more importantly we need to know how to interpret them, to use our historical knowledge to put them into a bigger picture.
So what do I think about the Hamptons market? It is usually the second question I am asked, after the perfunctory “How are you?” at every social event. And it is about the second from the bottom of the list of things I actually want to talk about when I’m balancing a glass of wine in one hand and a crab cake on a napkin in the other.
But right now, in writing, I’m ready to come clean. Always keep in mind the Manhattan real estate market. Trends in the Hamptons usually run parallel, if sometimes slightly later. When Manhattan rocks, the Hamptons roll. When Manhattan yawns, the Hamptons get sleepy. The fact that it is a buyer’s market in Arizona, or anyplace west of the Hudson, or even between the East River and the Shinnecock Canal has remarkably little impact on prices here. New Yorkers drive this market, even if they are not the only buyers.
We have not seen any big trends in the past year or so. Sales activity is not as white hot as it was for the previous couple of years, but things are still pretty good. The few great, trophy properties that come on the market sell. Anything else that is priced correctly will sell, although it might spend more time on the market than it did last year.
If you are looking for clarity and precision, for quantifiable, unequivocal answers, you’ll be disappointed. The real estate market is rarely that transparent. People who think they can read it definitively are mistaken. No one can predictably buy at the bottom and sell at the top.
If you happen to be a buyer now, my advice is to jump in. In my experience, no one who looks at long term prospects, rather than current tendencies, has ever gone wrong with property in the Hamptons.