It's getting to the point where one can anticipate with relative certainty the day-to-day ebbs and flows in Hamptons real estate activity based upon what data comes out of the hundreds and hundreds of market reports (if you know what to look for).
The number of residential sales is down slightly from last year, but rental numbers are up. The rise in interest rates is taking a bite out of the buy-vs-rent advantage, and since rentals have been down in recent years, rental prices have not appreciated nearly as much as sales prices have (that is, of course, with the exception of the super-premium high-end rentals which have appreciated exponentially). Ten years ago, the rule of thumb for summer rental prices was 10% of value. With that formula, a $1MM home would rent for $100K for Memorial Day to Labor Day, a $500K would rent for $50K, and so on. Today, that percentage has gone to as little as 4%-5%, even lower in some cases. With an average sales price in 2005 of over $1MM, the average rental price has not kept pace. In addition, a good percentage of buyers during the last few years used to be renters, so not only were they taking themselves out of the rental population, but many of them were also buying with the intent of renting their new purchase for part of the year to cover their "nut". It's worth noting that many of them took out 3/1 or 5/1 interest-only ARMs and are now cringing with every interest rate increase.
So, back to the day-to-day data. If the DOW, NASDAQ, and S&P are up today, business will be a little off tomorrow; this is because for many, Hamptons real estate purchases are competing with their investment dollars. Conversely, if oil/gas prices are up today, then Hamptons real estate will be busy tomorrow, because we are close to one of the most highly-populated markets in the US. Besides, if worse comes to worst, they can leave the gas guzzler at the summer house and take the Jitney back and forth (or, God forbid, the LIRR).
The DOW just hit a six-year high, and some will celebrate this weekend by buying that house they've wanted in The Hamptons (maybe they won't even wait for the weekend). Stay close to your Blackberries! Additionally, March's National Housing Sales report was up - that should give sellers a little more bravado. Buyers will be out this weekend and maybe even take Friday off to hit the market early.
The dollar has weakened today! Let's call our foreign customers and tell them the good news! The house they want is now another 2% discounted with their Euro.
The dollar strengthens tomorrow! Let's call our foreign clients and tell them we have a buyer for their house!
I've got to remember to send in that donation to RPAC today, because if the Democrats get control of the House and Senate, causing the next capital gains reduction vote to fail in 2008, then what?!?
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