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The state of the luxury real estate market

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Noel Roberts, Nest Seekers Private Client Lead, joined Yahoo Finance Live to discuss the Hamptons real estate market.

Video Transcript

ADAM SHAPIRO: Let's head out to the Hamptons because, wow, talk about beach resorts and prices shooting up. To help us understand what's happening, not only in the Hamptons market, but also in markets across the country, Noel Roberts, Nest Seekers Private Client Lead-- you also know him from "Million Dollar Beach House"-- it's good to have you here. How would you describe what's happening right now in, for instance, the summer rental market in the Hamptons?

NOEL ROBERTS: You know, we brokers sit around telling tales of last summer. And you'd think we were trading war stories. It was pure chaos in the Hamptons. This year, although we're not dealing with nearly as much frenzy as we saw in the midst of the pandemic, the overall market remains quite healthy. You know, real quick, I remember showing a rental home to a family last year, them saying, Noel, we love it. Let's move forward. You call the owner 20 minutes after you leave the home only to find out that someone else has outbid you.

So you find yourself in these bidding wars. Granted, if that happens once, it can be disappointing. That happened to a family of mine last summer three times on three separate occasions, three different homes, to the point where they said, you know, we give up. Our friend offered us their home in New Jersey. We're just going to stay there. So thankfully, this season hasn't been as wild. And a lot of people actually secured short-term and long-term housing for this summer last summer, so way in advance of the 2021 season, just to be safe.

SEANA SMITH: What does this mean for prices then? Are we seeing them pull back a bit to more normal levels?

NOEL ROBERTS: Not just yet. I wouldn't say that. I think there's still a very high demand. And the home prices have remained very healthy. If not, they've risen. But it hasn't inspired every owner to sell. Listing inventory has actually fallen 34% in the first quarter of this year, which is, you know, a decline that's pretty fast that we've seen. But the houses that do list are still flying off the market. The average days on market is around 101 days on average, which is 32% faster than last summer. But I'm starting to see buyers return to wanting to make, you know, more smart, savvy purchase decisions based on things like comparable sales and less on the fear and the emotion that kind of captured most people last year.

ADAM SHAPIRO: For those of us who are trying to understand the real estate market, are the majority of the homes that are selling, are they second homes? Are they vacation homes? Are they primary homes?

NOEL ROBERTS: Yeah, so I'd say 70% of-- historically, 70% of the homes have been second homes, vacation homes. What we saw of the pandemic is many more people make permanent decisions with regard to their work-life balance and where they need to live in accordance with where they work. So people sort of renting year round in the Hamptons more often, or they made their home in the Hamptons their primary residence and maybe let go of their apartment in the city. So it's become much more of a year-round community over the past 12 months.

SEANA SMITH: Do you think that's going to stick? Because now we have New York City fully reopening in the middle of the summer. Are you expecting those people to continue to stay out in the Hamptons? Or do you think more and more will eventually return to the city?

NOEL ROBERTS: You know, as the vaccines continue to roll out and that runs its course, and travel opens back up and people return to sort of their pre-COVID travel plans, whether it was overseas or down south, you will see the numbers tick down. But I think that there's been a change that's going to be far lasting, especially out in these vacation homes, not just in the Hamptons, but in the tri-state in general, where more and more people will want to stay out just because they've discovered that they need and they like the space. They like the area. They like to go swim at the beach.

So, the city will bounce back. But I've been spending time checking out Manhattan. And I'm seeing it start to revise. I spent the weekend down in Palm Beach. And it's very alive down in Florida. So, you know, people are slowly getting back into their groove. But I think places like the Hamptons are here to stay.

ADAM SHAPIRO: So what does it take to get the people who want to sell, but won't-- because where do they go, because those prices have gone up-- what pushes them into the sellers market, given what you just described, as buyers are making more savvy purchases?

NOEL ROBERTS: It's tough. It's about this meeting of the minds. Mind you, nobody needs to buy a $5 or $10 or $20 million home. You know, these are assets. These are investments for those who are fortunate enough to be able to afford them. And just like sometimes when a seller decides he wants to hold out in order to hit his price, buyers are wanting to hold out for the long term until they can make deals that they feel are more reasonable.

So I think with the pandemic, people decided that they had wanted to sell for a long time, made a decision to list their home, but also this change in administration-- you guys have been talking about it for a while now. I think that's going to start to see more people this year consider selling their home if they've seen, you know, appreciation. Or they're sitting on a potential large gain on their property, they may want to decide to sell that property this year in order to be taxed at their current rate, as opposed to what has been proposed.

ADAM SHAPIRO: Noel Roberts, Nest Seekers's private client lead, we appreciate your being here on Yahoo Finance Live.