Average home prices fell in the Hamptons in 2016.
- Meanwhile, further north in the Hudson Valley, the luxury home market is moving quickly.
- Some wealthy people are trading their Hamptons mansions for rustic homes in the Hudson Valley and the Catskills.
- Tourism to the area is also booming.
The Hamptons have long been a weekend playground for New York City’s wealthiest and most fashionable.
But thanks to a softening real estate market and the growing appeal of more affordable destinations, that could be about to change.
The various hamlets of Long Island’s East End are certainly still a haven for celebrities and Wall Streeters, as well as an older set of travellers, but there are some signs that the attention of potential second-home buyers could be shifting north.
Collapsing prices in the Hamptons
The Hamptons have a tony reputation for a reason. Though each of its hamlets has its own unique flavour, the Hamptons are known for their large, shingle-style homes with ocean views and proximity to fundraisers and other events wealthy neighbours throw throughout the summer. Finance professionals have long chosen to buy second homes here.
And while the Hamptons will continue to be a destination for a particular kind of home buyer, the housing market endured a slight slump in 2016, which some have attributed to the falling profits, bonuses, and headcounts seen on Wall Street last year.
The end of 2016 was particularly challenging for the Hamptons luxury real estate market, according to several different brokerages who released reports after the fourth quarter came to a close. Data from luxury real estate company Brown Harris Stevens showed that average home prices had fallen by 23.1% in the fourth quarter year-over-year.
“This was really due to the election,” Aspasia Comnas, executive managing director of Brown Harris Stevens of the Hamptons, told Business Insider. “We’re a secondary home market, and if our buyers or sellers feel at all uncertain about what their economic future will look like (and with a change in administration, there was no way but for there to be a change in the economy), buyers and sellers hold back.”
At the luxury end of the Hamptons market, the median sales price fell 29.5%, to $5.85 million, year-on-year, according to real-estate appraisal firm Miller Samuel. But this did not deter developers from putting more homes up for sale, as inventory increased 21% in the same period.
“Activity started picking up again in December and in January, so I’m guessing the market is making a recovery,” Comnas said.
Another report from Brown Harris Stevens showed that the number of sales that closed in all of 2016 was down 7.3% compared to 2015. Total dollar volume dipped 11.5% to $3.57 billion.
An alternative destination on the rise
While the luxury market in the Hamptons does appear to be softening, another destination with easy access to New York City has been growing in popularity.
The Hudson Valley is often broadly defined as the area stretching north from New York City along the Hudson River to Albany. Divided into three regions — lower, mid, and upper — the Hudson Valley is known for its charming towns, old-money estates, and proximity to the Catskill Mountains. Metro-North and Amtrak trains provide relatively easy access to these communities, each of which has their own unique personalities.
According to a fourth-quarter report from Heather Croner Real Estate of Sotheby’s, Hudson Valley’s luxury real estate market accelerated significantly at the end of 2016. Though median prices remained steady at around $1 million, the rate at which properties changed hands grew rapidly through the second half of the year.
“We’re cautiously optimistic that the momentum generated in the second half of the year will carry forward into 2017,” the report reads.
“The fourth quarter was very busy, and this quarter is too,” Heather Croner told Business Insider.
Entrepreneurs and Wall Streeters seem to be catching on.
Richard Ellis, owner of Ellis Sotheby’s International Realty in Nyack, New York, said that he has witnessed a growing trend of New Yorkers buying property in the Hudson Valley over the last few years. Many vacation home buyers he has done business with work in finance, have their primary residences in Downtown Manhattan or Brooklyn, and are in their mid-30s to 50s.
He has even worked with some clients who were specifically looking to trade in their Hamptons home for a quieter spot in the Hudson Valley.
“The lower Hudson Valley is certainly easier to get to than the Hamptons,” Ellis told Business Insider. “People who buy on our side of the river are not ‘keeping up the Joneses,’ so to speak. They’re looking to impress themselves, not others.”
The buyers he works with value the proximity to Manhattan, outdoor activities, and stunning landscape that the Hudson Valley offers. Snedens Landing, a community in the Palisades on the west side of the Hudson River, has long attracted creative types, including celebrities like Bill Murray and Al Pacino.
Dennis Crowley, co-founder and executive chairman of Foursquare, recently bought a second home in Kingston, located on the east side of the river in the mid-Hudson Valley. He even decided to start a semi-pro soccer team in the area, called Stockade FC.
“The Hudson Valley is a special place — it’s got everything that NYC is missing (grass! space! quiet!) with pockets of crazy energy and entrepreneurial spirit,” he told Business Insider. “Once we started spending a lot of time up there, we started realising how many other friends of ours were also in the process of finding a way to call the Hudson Valley home, at least part-time.”
“In Kingston, we’ve found friends within the strong community of makers and do’ers — some who work in tech, some who are writers and artists, some who have opened small shops or other local business — and many of these folks were involved in helping us build Kingston Stockade FC.”
Younger travellers are making their way north, too
Taken as a whole, the newest generation of travellers seem to value real-life experiences over luxury goods. And with lots of space to hike and interact with nature, the Catskills and Hudson Valley could be attracting adventure-seeking tourists on that point alone.
According to an analysis by vacation rental site HomeAway, New York City-based travellers are becoming more and more interested in the Hudson Valley as a vacation destination. Searches of rentable properties in the Hudson Valley by New Yorkers grew 121% between 2015 and 2016, according to HomeAway’s analysis.
In comparison, search inquiries of the Hamptons grew just 35% in the same period, though the Hamptons continue to be more popular overall.
Location-intelligence company Foursquare analysed weekend foot traffic and came to a similar conclusion, though it focused its study specifically on young travellers. According to the findings, which were first reported in Yahoo Finance, New York-based travellers between the ages of 20 and 24 “increased their trips to the Hudson Valley and Catskills by nearly 55% in the summer of 2016 compared to the same time in 2012. During that same period, this same group decreased excursions to the Hamptons by nearly 46%.”
New Yorkers venturing to the Hudson Valley and the Catskills can take advantage of a wide range of activities, from hiking in the Mohonk Preserve, to touring the art galleries of Kingston, to exploring the old-money estates where the Vanderbilts and Roosevelts once lived in Hyde Park.
Plus, the close proximity of the Culinary Institute of America means that there are plenty of excellent restaurants — many of which place an emphasis on farm-to-table ingredients — for both visitors and new second-home owners to enjoy. The towns of Hudson and Rhinebeck are especially popular destinations with the foodie crowd.