Rental rates in the Hamptons are falling this summer
A glut of summer rentals in the Hamptons is driving price drops of 20% or more as wealthy Wall Streeters and tech workers slash summer spending.
About 5,700 seasonal rentals are currently available for this summer on New York’s South Fork Peninsula, which includes most of the Hamptons, according to Judi Desiderio, CEO of Town & Country Real Estate in East Hampton. That’s double the number of apartments that would normally be available for a summer before the Covid pandemic changed holiday habits, she said.
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“There’s just too much inventory, at every level,” she said.
The rental glut in one of America’s wealthiest beach communities has begun to drive down prices. Realtors say many homeowners have started slashing rental rates by 10% to 20%, and rates are likely to fall further as homeowners struggle to fill their rental units before Memorial Day begins.
“We’re choked on the offer,” said Enzo Morabito, a Hamptons broker at Douglas Elliman. “And it’s all over the Hamptons.”
Granted, “bargains” are all relative in the Hamptons, where a typical three-bedroom home ranges from $60,000 to $100,000 for the summer, depending on location. Oceanfront homes can be rented for over $1 million per month.
But the aftermath of the pandemic has resulted in a record number of rental properties available, and agents say it could take a few more summers for prices and demand to normalize. In the spring of 2020, droves of wealthy New Yorkers fled the city to the Hamptons, and many bought homes. This led to a sales boom that saw volumes and prices soar. Median selling price increased more than 40% to over $1.2 million.
Now many of these new homeowners are trying to rent out their homes, either because they want to be away for part of the summer or because they want to use the income to help pay for their home. The increase in supply has turned a market on its head that has traditionally featured a limited number of rental properties and consistently high prices.
“We had a balanced market before Covid,” Desiderio said. “Demand wasn’t out of control and prices held up for years.”
Many of the new homeowners also opted to rent because they had expected the boom rental prices of 2020 and 2021, which are now unrealistic, realtors say.
“I get clients who come up to me and say, ‘I want to rent my house for $250,000,'” said Gary DePersia of Corcoran Group. “I tell them that’s not realistic anymore. The market has changed.”
DePersia is advising its rental customers to offer more flexible leases — maybe for two weeks or a month instead of all summer — and to lower prices.
The other big problem is falling demand. With the Hamptons still heavily dependent on Manhattan’s economy — and particularly on finance and technology — they are beginning to feel the chills of a falling stock market and shrinking IPOs and capital markets. Wall Street bonuses were last down 26%, and several of the big Wall Street companies and banks, including Morgan Stanley, Citigroup, Bank of America and Lazard, have announced job cuts.
“The Hamptons are connected to Wall Street by an umbilical cord,” Desiderio said. “When Wall Street is doing well, we are doing well. If she withdraws, we withdraw.”
The only bright spot in the rental market, at least for owners, is in the very upscale segment, particularly by the sea. Realtors say an oceanfront home in the Hamptons was already renting for $2 million a month this summer, though realtors declined to give details.
They say there are at least three more homes for sale for $2 million or more this summer.
DePersia has a 12,000-square-foot oceanfront rental in Bridgehampton that is listing for $600,000 for two weeks. The newly built home with 10 bedrooms, over a dozen bathrooms, multiple kitchens, an ocean view pool and a rooftop hot tub has already attracted a number of potential renters.
“When you talk about oceanfront new builds, all the amenities for entertainment and families, there just aren’t many,” he said. “And the kind of people who would rent an apartment like that aren’t that badly affected by the stock market or job cuts.”
https://www.cnbc.com/2023/05/15/hamptons-summer-rental-prices.html Rental rates in the Hamptons are falling this summer