Opinion: Will 2018 Be A Bust Or A Burst Year For The East End?

The coming 2018 summer season in the Hamptons real estate market will be very telling about the United States economy, and the economic situation on Long Island for the next few years.

The reason is as simple as the 2008 bubble-bursting real estate market in conjunction with the April, 2000 tech stock meltdown, both occurring in the last 18 years. In those instances huge amounts of value in homes and stocks were wiped out in a very short time; that created serious damage to the future of those who owned tech stocks in 2000 or the mortgaged homes in 2008. So why is now like then?

My answer is because of the overconfidence of almost everyone on Wall Street. Dow 25,000 or even, Dow 30,000, seems to be the battle cry on Wall Street. One is beginning to hear folks quietly bragging about their 401Ks again. Too many are aiming all their savings towards Wall Street and shying away from home or second home purchases, specifically home purchases over $2M. On Long Island as a whole, up-island real estate agents are telling me correctly price homes under $500,00 to $700,000 are moving. Unfortunately in the Hamptons that is the basement prices of homes.

Let’s first examine the Hamptons real estate market heading toward the summer of 2018. When I asked Joe Kazickas, a founder of the Rosehip Partners Real Estate Agency, "What is your forecast for 2018 Hamptons real estate market?", he texted me, “High end flat, a buyers' market. Under $2 million should continue active, expect good rental demand, no worse than 2017.” I have known Joe for almost 15 years and all his forecasts have always been dead on.

So then I asked Diane Shifman, a licensed real estate salesperson for COMPASS, on Main Street in East Hampton. Her response to the same question for a forecast was more tempered. Diane said, “It’s hard to gauge the 2018 season. We’re coming off a 2017, which was slower and had way more monthly rentals as opposed to seasonal. I’ve seen renters go through owners direct to take advantage of shorter rental terms. But with the U.S. Open (golf) and coming off a cold winter, we are hopeful that it will be successful and busy 2018. Once the heat hits there is no better place than the Hamptons.”

Here is what I believe. I believe it is time for the seasoned investor to cash out on the high stock market and take part in the stagnant Hampton real estate market for either a second home, or an investment property. My grandfather used to say buy low and sell high. The market is record high and homes are a buyers' market. So that brings us two Part 2: the economic situation on Long island.

The ramifications of the new federal tax law are still really not known. What is known is that Long Island as a whole has been steady and strong economically. Homes are selling and prices are up 8% for 2017 across the island, as I reported in a previous article. However another Wall Street collapse will not be good for the island. It is my advice to diversify. Fast talking, helicopter flying Wall Street brokers and sales people will say “No way.” But an old man told a young man many years ago, “Son, you will never go broke taking a profit.” That man was my dad. My advice: Sell the paper assets and buy tangible land.

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Patch courtesy photo of author T.J. Clemente.