Real estate is booming almost everywhere amid the pandemic, but the gains in local housing markets are far from equal. Two wealthy New York City satellites, the Hamptons and Greenwich, Connecticut, are quickly overtaking their neighbors in sales volume – a development that isn’t as predictable as you might think.
âSince the end of the pandemic lockdown, both markets have been in tears, recording record sales levels and price growth,â said Jonathan Miller, of Miller Samuel, the valuation company.
In the first quarter of 2021, the number of real estate sales over $ 5 million in Greenwich increased 400% year-over-year, from five to 25; sales between $ 1 million and $ 5 million increased by about 90 percent. In the Hamptons, the corresponding segments grew 24% and nearly 83% year on year.
Sales under $ 1 million have also increased – 73% in Greenwich and nearly 30% in the Hamptons. This week’s graph shows data provided by Miller and Douglas Elliman.
This is all new. Sales suffered in both areas after the 2008 housing bubble and were further slowed by Trump’s tax reforms, which capped state and local property tax deductibility, pushing up the annual cost of these highly taxed homes.
These are wealthy areas, but they are different markets – Greenwich is primarily primary residences, the Hamptons primarily second homes. So, what drives the parallel arrows? Cash.
âThis sales model relies more on cash than on financial engineering,â said Miller, noting that loan underwriting is 20% stricter than the historical norm, even with low interest rates.
People in higher-paying jobs suffered much less from unemployment during the pandemic. The economy is strong, the stock market is booming, and people want to move. Those who have the means are simply more free to do so. âThere has been an unprecedented amount of recalibration of how people think about housing and where they can live due to the flexibility of remote working,â Miller said.
As the pandemic recedes, however, migration patterns are likely to change again and may drag the market with them. Strong price increases – up around 31% year on year in Greenwich and the Hamptons in the first quarter of 2021 – could make these homes more difficult to sell in a few years if demand decreases.