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Westhampton Real Estate Market Forecast 2023

04/7/23  |  Maria Cunneen

As mortgage rates and inflation increase, what does this mean for Westhampton?


Approximately 1.5  hours from New York City is Westhampton — a charming upscale beachfront town. With its idyllic location, some of the most desired luxury properties in Long Island are located here. It boasts the perfect blend of bucolic, small-town life, world-class beaches, fine dining, and round-the-year events. For people who want the best of both worlds, it is an easy commute to the city while living in one of the most picturesque coastal spots.
 
Although Westhampton real estate experienced a dip in sales during the last half of 2022, prices remain high. Consequently, Westhampton real estate remained a desirable investment for buyers looking for a scenic getaway.

Westhampton


Westhampton is one of 18 hamlets in the Township of Southampton, Long Island. The various hamlets include Remsenburg, East Quogue and Hampton Bays. Mixed between the aforementioned are the Villages of Westhampton Beach and Quogue Village.. Known for  quiet, scenic streets and avenues, it is lush w specimen trees, rich foliage and inviting residential areas, not to mention the close proximity to the beautiful ocean beaches. Its all encompassing real estate consists of modest residences as well as spectacular waterfront estates. There is something here for everyone.
 
The area boasts fine dining, excellent shopping, and rich cultural activities, including annual events like the Westhampton Beach Festival of the Arts and Westhampton Fine Art Festival. For its active members, there is the Westhampton Beach Tennis Club or watersports such as fishing, sailing, and paddleboard.

Boom leads to high prices


As the economic and employment climate started to change back in 2020, buyers, who had the option to work from home rather than in an office, also realized they could live where they wanted to suit their quality of life. This has translated to people buying homes that reflect all of their needs and wants — especially location-wise. Coupled with record-low borrowing costs and demand for housing, hyper-competitive conditions emerged and ensured that sellers held all the cards in negotiations. This, in turn, led to record-breaking surges in house prices during 2020 and 2021.
 
But by early 2022, that surge showed signs of waning as mortgage rates and inflation rose and inventory depleted. The monthly payments for a median-priced home increased significantly, cooling demand.
 
The housing market remains a seller’s market, despite the cooling of the pandemic pricing. Most buyers awaited purchase, watching the market to see any dramatic drop.
 
Tellingly, although buyers are less beholden to the whims of sellers, sellers still wield a lot of power in negotiations to dictate house prices and other concessions. In August 2022, a study found that over 85% of sellers who sold their homes during this period received over the asking price, and were very satisfied with their transactions.
 
The future housing market faces uncertainty as it moves into 2023, but it also holds some optimism. While sales dropped in the second and third quarters of 2022, house prices remained strong across the housing market. Demand cooled as buyers became more reluctant to rush into transactions, but buyers are still interested in investing in real estate especially as Summer nears.
 
Despite the concerns, what the housing market is experiencing is less a decline and more a case of the market correcting from unprecedentedly high prices and demand to somewhere closer to normal.

Sales decline as prices remain high


Moving into the second quarter of 2022, the number of transactions for South Fork, which includes Westhampton, real estate declined by 36%, and sales volume dropped by 33% compared to the same quarter in 2021. The average price for a home rose slightly by 4% to $3,297,180, and the median price by 10% to $1,850,000. Despite a decline in both transactions and volume, figures for the second quarter of 2022 were still higher by 22% and 29%, respectively, compared to the first quarter of 2022.
 
Negotiability remained tight in Q2 of 2022 at 1.07% compared to 3.35% in the same period in 2021. To give this figure context, negotiability in the same quarter in 2019 was 9%. Of the homes sold during this period, almost 20% sold for more than the asking price.
 
As of November 4, 2022, the median price for a Westhampton single-family home was $2.13 million, with the price per square foot at $646. For a condo, the median price was $982,000, with a price per square foot of $1,204. Days on the market were 100 for a single-family home and 64 days for a condo. Inventory was 35 for a single-family home and 3% for a condo.
 
In the third quarter of 2022, closed sales for the Hamptons were down to their lowest figure in a decade. The total dollar volume of sales was also down compared to 2021. However, the median price of a home was higher than the median price in 2021 for the same quarter. The Westhampton region experienced a similar trend, where the median and average price rose across the board in 2022 compared to 2021, while the number of closed sales fell in 2022 compared to 2021.

What these trends suggest


If mortgage rates continue to rise, house prices could begin to drop, and days on the market may increase. Low inventory means house prices are unlikely to drop, or if they do, are likely to do so at a slower rate. Currently, the biggest concern is inflation. If it continues to rise into 2023, this could lead to a further increase in interest rates.
 
The Westhampton real estate market remains robust, with prices remaining high. As buyer activity slows, sellers may not receive as many offers compared to the heights of 2021 and 2022, but there is still demand for upscale Westhampton homes. Even though the market shows signs of dipping, it is still possible for sellers to sell their homes at a healthy profit. Buyers, waiting for prices to drop, could wait for some time. The market is still competitive, particularly for people who want that luxurious, beachfront life with a relatively managable, short commute from NYC.
 
Buyers looking to invest in Westhampton real estate can contact Maria Cunneen. Let’s start that conversation.




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