The playground for America’s ultra wealthy is showing signs of trouble. The Hamptons, a group of beachfront villages in Long Island about a hundred miles from New York City, are the go-to destination for elite Manhattanites who spend tens of millions of dollars to buy summer homes.
But fewer people are buying in the Hamptons compared to a year ago. According to Jonathan Miller, president and CEO of appraisal firm Miller Samuel, sales activity on a year-over-year basis is down 21%.
“The previous three years have been this frenetic market with record volume, and the level of sales we’re seeing right now is about 25% higher than the long-term average of sales activity,” says Miller. “So we’re somewhere in between this frenetic market and a very quiet market.”
Hamptons losing their cachet?
When asked whether he thinks the Hamptons are losing their cachet, Miller says that’s simply not the case. The Hamptons market is a mirror image of the slowdown in the upper end of the Manhattan market, as well as the global luxury real estate market at large.
“I’ve been tracking the market for three decades, and we have cycles. Essentially, after the financial crisis began, the high-end market was the first to recover. That cycle has been played out, and now there’s renewed emphasis on the other aspects of the market besides the high-end market,” he says.
That’s not to say that people are ditching the Hamptons entirely. But they are finding alternatives.
New York’s Hudson Valley and Westchester County and Northwestern Connecticut are the top markets for East Coast summer homes, according to Miller.
Palm Beach, Fla., is considered the primary competitor to the Hamptons because of the lengthy commute between NYC and the Hamptons. Instead of spending hours in traffic on the Long Island Expressway, many wealthy New Yorkers would rather hop on a three-hour flight to the Sunshine State instead.
“The rich get bored. They look for variety,” says Miller. “This is a global phenomenon. The high-end markets in many large metro areas are seeing a slowdown—we see that in London, Hong Kong and Sydney. Now you’re seeing the balance of the market. We’re seeing a big push in activity outside the luxury market.”
Where would you spend your summers if you had tens of millions of dollars to burn? Tweet me or let me know in the comments below.
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