2022 Annual Market Report

Industries change. Markets evolve. Great companies innovate.

Luxury real estate should be no exception.

Yet, the traditional brokerage/agent/commission construct has not evolved in decades—and as a client, you’ve noticed.

Recognizing the need for change, Bespoke Real Estate launched as the first and only firm to solely represent homes above $10 million with a revolutionary direct-to-client model.

Since our inception, Bespoke has been on a mission to deliver more value by streamlining and monetizing industry inefficiencies for you.

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WHAT SETS US APART

TAILORED FOR $10M +

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1% LIST-SIDE COMMISSIONS

In traditional brokerages, both the independent agent and the brokerage take a commission, resulting in unjustifiably high fees for the client. At Bespoke, our direct-to-client model removes these splits and delivers more value to you.

REVOLUTIONARY DIRECT-TO-CLIENT MODEL

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RESULTS

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Weʼre on a mission to make the industry better for you. For decades there were no other options—Now you have Bespoke.

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EXECUTIVE SUMMARY

HAMPTONS | MANHATTAN | SOUTH FLORIDA

Above all, 2022 was a year of re-stabilization. There are innumerous reports that project it as otherwise, that 2022 was a year of lows. But in the interest of sensationalism, these headlines fail to account for a crucial factor: context. At Bespoke, however, we have built a company to study and convey to our clients exactly that.

With our powerful analytics team and robust database, we’ve found that while it’s true that 2022 saw fewer transactions than 2021 or 2020, those years were economic black swans. The truth is, when looking at the performance of 2022 compared to historical averages as far back as 2013, this past year was one of remarkable market stabilization and health, with all three markets beating their historical annual average trade quanitities.

BEATING HISTORY

In 2023, we expect the market to sustain some turbulence, but by the end of the year, stay on par with historical averages, or perhaps even exceed them. Consistently over the last three years we’ve seen absorption of quality inventory as a hugely influential factor on the market, resulting in buyers who were willing to pay premiums for triple-A trades over the last few years, and sellers who are unlikely to change their perceived value of their home. We believe that this will ultimately result in higherticket transactions as 2023 continues. Still,

there has been a shift in the average buying cycle length over the past several months, with the second half of last year seeing buyers taking more time to close on $10 million+ homes.

INTEREST RATES

Another important consideration from the past year, and which will shape the market in the next year, is macro-economic factors, namely interest rates. Over the next year, we expect two potential outcomes: the first being that the Federal Reserve keeps interest rates high and perhaps even continues to raise them. In this case, which is what we’ve seen in the last couple of months, $10 million+ homeowners who purchased their home in the low-interest rate market of 2020 and 2021 will be less motivated to sell, as their new acquisition to replace the home they sold would likely mean paying higher interest rates. This low interest-rate environment fueled the tremendous absorption of inventory that has been a consistent theme over the last several years. With high demand and little supply in the market, cash-rich buyers who need to borrow less money have a strong advantage.

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Alternatively, if the Federal Reserve concludes that it has raised interest rates and stifled demand enough to turn the inflationary market around, it may then lower interest rates in response. Then the cost of capital becomes cheaper, resulting in a strong $10 million+ market in the second half of this year. Analysts at prominent financial institutions predict that this will be the case: that mortgage rates have already peaked and home prices will stabilize, dropping around 10%. Still, because of absorption, tight supply and pentup demand, prices aren’t likely to crash either. Furthermore, the falling price of lumber—around 60% in the last year— will further incentivize developers to increase the available supply in the markets, opening up the market towards the second half of the year and into early next year.

A UNIQUE CLIENTELE

That all said, as the only $10 million+ brokerage firm, we at Bespoke deeply understand our client base, and as such understand that ultra-luxury buyers operate somewhat independently of macro-economic markets. In fact, the negative impact that other publications claim the larger global market has on $10 million+ buyers better reflects their lack of familiarity with the market than an understanding of it. From our position, it’s clear that 2022 was a year of strength particularly in relation to sales volume, and we expect 2023 to be the same, perhaps surprising many.

ENJOY THE INSIGHT.

Cody Vichinsky

FOUNDING PARTNER & PRESIDENT, BESPOKE

THE HAMPTONS $10M+ MARKET

140 Murray Lane, Southampton, NY Southampton Oceanfront Estate 2.64 Acres+/- | 7,975 SF+/-

6 Beds | 7 Full and 1 Half Baths Bespoke Exclusive. $41,900,000

Total $10M+ Trades in 2022

While there was a decline in trades in 2022 to 78, this is still significantly greater than the market’s trade quantity average between 2016-2019, of 49.75.

$10M + TOTAL HAMPTONS SALES BY LOCATION

The data shown below includes the 9 locations surveyed within the Hamptons $10M+ real estate market YoY.

*Includes Westhampton-Hampton Bays

$1.5B+

Total $10M+ Trade Volume for 2022

2020 and 2021, there was an average of 71.6 homes traded in those years, which 2022 exceeded by 6.

$10M + TOTAL HAMPTONS SALES BY PRICE POINT

The data shown illustrates the total sales quantity and volume within the ultra-luxury real estate market surveyed within the Hamptons YoY.

A YEAR OF STABILIZATION

No market better demonstrates the importance of historical context in the $10 million+ industry than the Hamptons, where Bespoke has led the market in sales for the last several years. In 2019, a year considered consistently healthy compared to historical yearly trade averages, there were 47 $10 million+ trades. 2020 saw that number double as people fled the city, to 104 trades, followed by 127 trades in 2021. While there was a decline in trades in 2022 to 78, this is still significantly greater than the market’s trade quantity average between 2016-2019, of

49.75. Even when considering the meteoric trade rates of 2020 and 2021, there was an average of 71.6 homes traded in between 2016-2021, which 2022 exceeded by 6.

As such, this past year ultimately reflects the market returning to its stasis healthily. Trades did not drop off a cliff towards pre-pandemic averages, rather they are gradually evening out based on “normal” economic conditions, not extreme ones like during the pandemic Deals are being made over a longer buying cycle, a sign of thoughtful buyers making sound trade decisions rather than reactionary ones.

The reduced cost of lumber compared to 2021 resulted in stronger development rates again, and in turn, an uptick in new construction transactions.

The same theme of absorption of quality product is still consistent, and we expect it to continue into the medium term. This is another sign that thoughtful buyers bought well in 2021 and found no reason to sell. That said, the reduced cost of lumber compared to 2021 resulted in stronger development rates again, and in turn, an uptick in new construction transactions, where buyers were willing to pay a premium for new builds. This further demonstrates buyers’ increased patience in the buying cycle, which is typical of a healthy market with consumer trades over $10 million+. Again,

this is notably different than the sentiment in 2020, when buyers rushed out east and focused on turnkey properties for immediate move-in.

In addition to new construction, the increase in waterfront sales in 2022 to 26% of all trades also demonstrates buyers’ willingness to be patient and thoughtful about quality product. For context, waterfront sales in 2020 and 2021 were 16% and 23%, respectively.

Sellers are also not so quick to lower their prices, evidencing a stabilizing market, hardly one that is “slowing down”.

HAMPTONS $10M+ MARKET

TRADES 2021 TRADES 2022 TRADES

MANHATTAN $10M+ MARKET

Total $10M+ Trades in 2022

With 278 trades in the last year, only one trade less than 2021’s 279 trades, New York City continues to stabilize and recover.

$10M + TOTAL MANHATTAN SALES BY LOCATION

The data shown below includes the 6 locations surveyed within the Manhattan $10M+ real estate market YoY.

$4.6B+

Total $10M+ Trade Volume for 2022

The Upper East Side was the strongest neighborhood, making up 38% of 2022 trades.

$10M + TOTAL MANHATTAN SALES BY PRICE POINT

The data shown illustrates the total sales quantity and volume within the ultra-luxury real estate market surveyed within Manhattan YoY.

In 2022, New York City continued to remain in recovery mode from its 2020 lows. With 278 trades in the last year, only one trade less than 2021’s 279 trades, New York City continues not only come up from its pandemic windfall, but exceed the average number of trades between 20162021, of 247.

Anecdotally, the sentiment in the city is high as well; our UHNW market in the Hamptons extends, of course, to New York City, which indicates favorable attitudes around transacting in the city in the coming year.

Reflected in our quarterly reports over the last year, the Upper East Side was the

strongest neighborhood, making up 38% of 2022 trades. This is notable compared to the West Village and Tribeca neighborhoods that together had the top place in 2020 and 2021 at 40% and 36% respectively, but fell to 27% of all trades in 2022

This strength comes from consistent transactions in the $20 million+ segment of the market, which made up for 17% of trade volume both this past year and in 2021. New development continued to outperform in the New York City market by a large margin, resulting in 100 of the 278 trades, or about 36% of trade quantity, while reaching a total trade volume of $1.54 billion, the most we’ve ever recorded. For comparison, there were only 62 new development trades in 2020 and 47 in 2021. We believe the reason for this uptick is due to many developers

who took advantage of low prices to invest in new large-scale ultra-luxury developments. Coupled with the general demand for turnkey sales in the city, new development sales hit record highs.

Townhouse sales, however, remained flat, making up for about a quarter of the trades last year and the year prior. The average price of a townhouse was $18.75 million, just under the $20 million+ price segment that we’ve seen carry the strength of the market in the last two years.

The average price of a townhouse was $18.75 million, just under the $20 million+ price segment that we’ve seen carry the strength of the market in the last two years.

New developments resulted in 100 of the 278 trades, or about 36% of trade quantity, while reaching a total trade volume of $1.54 billion

MANHATTAN $10M+ MARKET

Total $10M+ Trades in 2022

2022 finished strongly at 286 trades, about 21% over its fouryear average of 235, between 2019-2022.

$10M + TOTAL SOUTH FLORIDA SALES BY LOCATION

The data shown below includes all locations surveyed within the South Florida $10M+ real estate market YoY

$5.1B+

Total $10M+ Trade Volume for 2022

178 of the total trades, or 62%, were single-family residences, a standout rate that best gauges buyers’ willingness to stay in a market long term.

$10M + TOTAL SOUTH FLORIDA SALES BY PRICE POINT

The data shown illustrates the total sales quantity and volume within the ultra-luxury real estate market surveyed within South Florida YoY.

The year also finished with 47 land/teardown sales, the highest we have ever recorded.

Just as we predicted in our last third quarter 2022 report, South Florida’s trades tell a story of buyers planting their roots in the region, rather than those looking to buy and sell quickly. This is one glaring sign that the South Florida is a maturing, albeit nascent, $10 million+ alpha market. This is certainly in line with our own experience at Bespoke, as we have opened our office to support the influx of our clients moving to this market, and as a result have facilitated $30 million+ transactions at the Waldorf Astoria, among others.

HERE TO STAY

One sign of the market’s maturation is the staying power of purchases in the last year. 2022 finished strongly at 286 trades, about 21% over its four-year average of 235, between 2019-2022 (tracking only exists since 2019 as this was when South Florida became an alpha market). About 178 of those trades, or 62%, were single-family residences, a standout rate that best gauges buyers’ willingness to stay in a market long term, as condos and co-ops in South Florida tend to indicate shorter term intentions.

The year also finished with 47 land/teardown sales, the highest we have ever recorded. It is safe to assume that nearly all of those are set to become single-family residences, if they haven’t already been built.

2000 Ocean, a new development with $10 million+ units in Hallandale, outside of the typical Miami and Palm Beach markets, is a clear example of sustained demand and longterm interests buyers have in the region. Just as all $10 million+ markets have had to expand out of a small neighborhood into a larger region at some point in their history in order to become a fully-realized alpha market—whether that’s from New York’s Upper East Side to the rest of Manhattan and Brooklyn, or Beverly Hills to the rest of Los Angeles—South Florida appears to be doing the same today.

External factors have contributed to the strength of the market as well: local governments are giving those who moved to the region during the pandemic a reason to stay, particularly in the form of favorable tax legislation in the state.

WHAT’S NEXT FOR FLORIDA

In terms of our predictions for 2023, we believe that even if we see a slower year, the rate of new construction and land/teardown trades will be particularly telling of the staying power of the market, and ultimately its continued growth and sustainability as an alpha market. Again, these are the best indication that purchasers are looking to solidify South Florida as a homebase in the long term. With an influx of brand new homes, we expect to see an increase in the value of entire neighborhoods, and with a ripple effect, set a price floor on the entire market. In other words, with the influx of new homes that we expect to see built in the next year, we do not expect to see Florida go back to pre-2019 rates of sales at any time in the near future. We do expect prices throughout the next year to stay consistent, making the market a good time to buy as interest rates are expected to come down throughout 2023.

With the influx of new homes that we expect to see built in the next year, we do not expect to see Florida go back to pre-2019 rates of sales at any time in the near future

15756 Ocean Breeze Lane, Wellington, FL 5 Acre+/- Pre-Completion Equestrian Compound

16,354 SF+/- | 10 Beds | 8 Full and 1 Half Baths Co-Exclusive. $11,000,000

SOUTH FLORIDA $10M+ MARKET

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