The Hamptons is no stranger to market fluctuations. While demand in our exclusive enclave is influenced by seasonal trends, high-profile buyers, and market conditions in New York City, one external factor that can have a noticeable impact; a presidential election year.
For nearly 25 years selling Hamptons real estate I know all too well how election years can bring a mix of uncertainty and opportunity to the Hamptons housing market. For buyers, sellers, and investors in this unique market, understanding how political cycles affect luxury real estate can provide a valuable edge in navigating a year marked by unpredictability.
Historical Trends in the Hamptons During Election Years
Buyer Hesitation and Slower Sales
Presidential elections tend to create a sense of uncertainty across the nation, and this hesitancy often finds its way into the Hamptons market. The prospect of changes to tax policies, interest rates, or economic regulations can cause high-net-worth buyers to press pause on major purchases.
Historically, luxury markets like the Hamptons tend to see slower transaction volumes in the months leading up to an election. Many potential buyers adopt a “wait and see” approach, especially if proposed policy changes could affect capital gains, property taxes, or mortgage interest deductions—financial considerations that are particularly important in a high-value market like the Hamptons.
In the 2016 and 2020 election years, data showed a noticeable dip in luxury home sales during the final quarters. However, just as quickly as sales slowed, they rebounded after the election, with pent-up demand driving a surge in transactions during the first quarter of the following year.
The Impact of Financial Market Volatility
The Hamptons real estate market is heavily influenced by the financial markets, given its ties to Wall Street executives, hedge fund managers, and other wealthy buyers whose fortunes are linked to stock performance. Presidential election years tend to bring volatility to the stock market, and this can have a ripple effect on real estate activity.
Tax Policy Uncertainty and High-End Buyers
In an area like the Hamptons, where most properties are priced in the millions of dollars, potential shifts in tax policy can weigh heavily on buyer sentiment. Election years often bring uncertainty regarding changes to capital gains taxes, property tax deductions, and inheritance taxes—all of which are critical for luxury homeowners and investors.
In previous election cycles, concerns over changes to federal tax laws caused some sellers to accelerate their timelines to lock in current policies, while others took their properties off the market, waiting for a clearer picture of the tax landscape post-election. For buyers, particularly those in high-tax states like New York, potential changes to deductions can lead to delays in purchasing decisions.
Consumer Confidence in Luxury Markets High-end buyers in the Hamptons, like elsewhere, are driven by consumer confidence, which can dip during an election year. The uncertainty around future leadership, policy changes, and economic stability can erode confidence, particularly when it comes to making substantial financial investments such as purchasing a second or third home.
Historically, this dip is temporary. Once the election is decided, confidence typically rebounds, and buyers re-enter the market, eager to take advantage of the available properties. In 2012 and 2016, for example, the Hamptons saw a significant uptick in transactions in the months following the election, as uncertainty lifted and buyers felt more secure about their financial futures.
What to Expect for the Hamptons in 2024
As we approach the 2024 election, the Hamptons market may see familiar patterns play out:
A Slowdown in Sales: Much like previous election cycles, transaction volumes may dip as buyers adopt a cautious approach leading up to November. High-net-worth individuals, particularly those with financial ties to Wall Street, are likely to delay purchases until they feel more certain about the election's impact on the economy and financial markets.
Mortgage Rate Sensitivity: Although luxury buyers in the Hamptons are often less reliant on mortgage financing, fluctuations in mortgage rates could still influence the broader market. Significant shifts in interest rates, combined with election-year uncertainty, may push some buyers to hold off on finalizing deals.
Potential Tax Implications: With ongoing discussions about tax policy, buyers and sellers in the Hamptons may be paying close attention to candidates' proposals regarding capital gains taxes, estate taxes, and deductions. Any changes to these areas could have a direct impact on luxury homeownership, pushing some to act before potential new regulations take effect.
A Post-Election Surge: Historically, once the election results are in and uncertainty lifts, the Hamptons real estate market tends to experience a surge in activity. Buyers who postponed decisions may jump back into the market, leading to an increase in transactions during the first quarter of 2025. This could lead to competitive bidding for high-end properties, as pent-up demand meets limited supply.
Long-Term Effects on the Hamptons Real Estate Market
While election years tend to cause temporary disruptions, the long-term effects often depend on the policies implemented by the incoming administration. In a market like the Hamptons, where wealth concentration is high, several key areas can have a lasting impact:
Changes in Wealth Taxes: Any shifts in estate taxes, capital gains taxes, or tax rates on the wealthy could influence the behavior of buyers and sellers in the Hamptons for years to come. A more favorable tax environment could drive increased demand, while higher taxes might prompt some sellers to cash out or reconsider their real estate portfolios.
Housing Policy and Affordability Initiatives: While affordable housing policies may not directly impact the Hamptons' luxury market, broader economic policies can shape investor confidence. Policies that support economic growth and consumer spending could lead to a more robust real estate environment, while more restrictive measures might curb investment. The demand for affordable housing east of the canal has skyrocketed, but unfortunately, very few legislative solutions are in sight. Seasonal workers are the heartbeat of the Hamptons. There would be no Hamptons without them.
I conclude:
For the Hamptons real estate market, a presidential election year can bring uncertainty but also opportunity. While some buyers and sellers may pause to evaluate the political landscape, history shows that the luxury market is resilient. As the 2024 election approaches, understanding these historical patterns can help both homeowners and investors in the Hamptons make strategic decisions, staying ahead of the market's ebb and flow.
Be prepared for some short-term turbulence but expect a strong rebound once the political dust settles—this is, after all, the Hamptons.
