As U.S. equity markets continue to surge to new all-time highs with each passing day, something you would expect to benefit the titans of high finance in Manhattan, demand for luxurious, multi-million dollar weekend getaways in the Hamptons has all but completely disappeared.
According to a new 4Q report from Douglas Elliman, the Hamptons real estate market is in full-on crash mode with average prices down 29.7% YoY in 4Q16 and volumes down 14.5%.
Meanwhile, the "luxury" market in the Hamptons, which apparently includes homes with an average price tag of ~$7 million, is faring even worse with prices down 42.6% YoY and volumes down 14.5%.
Seems that New York's hedge fund billionaires just can't seem to make money at work or on their homes.
As the Wall Street Journal noted, Jonathan Miller of Douglas Elliman doesn't expect the carnage in the Hamptons to slow anytime soon as he says there is still "“too much overpriced inventory—and it is rising.”
Brokers said the luxury market was particularly weak in 2016, despite some trophy sales reflecting the last gasp of a stronger market that surged at the end of 2014.
“Softness at the top continues,” Mr. Miller said. There is “too much overpriced inventory—and it is rising.”
Of course, the soft market didn't stop the hedgies from recording a couple of trophy sales in 2016. Per Douglas Elliman, the most expensive sale of the year was $109.8 million with the second highest sale a mere $70 million...must have been a dump.
The top transaction of the year was the $109.8 million sale of three parcels on Lily Pond Lane in East Hampton by hedge-fund manager Scott Bommer. Mr. Bommer had paid $93.9 million for the properties several years earlier. The buyer, brokers said, was Michael S. Smith, a natural-gas executive and investor.
The second-most-expensive sale was a waterfront home just down the street, at 199 Lily Pond Lane. The price was $70 million.
Oh well, on the bright side, all of these real estate losses can quickly be wiped away with less than 1 year of management fees charged to America's insolvent pension funds in return for below-S&P performance...life is good!