Seasonal Rental Market

David Goldsmith

All Powerful Moderator
Staff member

The Hamptons summer rental market is facing an unexpected chill as inventory piles up and prices come down

Key Points
  • After two years of strong demand and soaring prices, the supply of rentals in the Hamptons is surging, leading to a wave of last-minute price cuts.
  • Brokers say weaker demand is partly the result of increased travel elsewhere.
  • The Hamptons may also be feeling the flipside of recent price increases and a strong home sales market.
Why rental prices in the Hamptons are down 26% this year
The rental market in the Hamptons is facing an unexpected chill this summer.
After two years of strong demand and soaring prices, the supply of rentals in the Hamptons is surging, leading to a wave of last-minute price cuts. Median rental prices in the first quarter fell 26%, according to Jonathan Miller, CEO of Miller Samuel. Brokers say some owners are slashing prices by 30% or more just to fill their properties.
“There is a tremendous amount of inventory and people are not renting it,” said Enzo Morabito of Douglas Elliman. “And it’s across all segments, from the very low to the very top of the market.”
The weakness marks a dramatic and rapid reversal for one of the country’s highest-priced and most sought-after real-estate markets. In 2020 and 2021, renters were scrambling to find summer rentals and paying record prices months before the season for fear of missing out. Now, brokers say there are hundreds of rentals still available for the summer.
Morabito said he represented one waterfront rental that was asking $70,000 a month, but a potential renter offered just $45,000.
“We were hoping the renter would split the difference, but it’s a different market right now,” he said

Brokers say weaker demand is partly the result of increased travel. Wealthy New Yorkers who spent the past two summers cloistered in the Hamptons are planning to travel to European and other countries this summer as Covid recedes. Europeans and other international renters, however, have not returned to the Hamptons.
The war in Ukraine, rising inflation and a falling stock market may also be weighing on the summer spending plans of the elite — especially since the Hamptons market is so closely tied to the fortunes of Wall Street.
“There are a lot of questions in the air, about the economy, both locally and nationally,” said Harald Grant with Sotheby’s International Realty. “It all effects the market.”
The Hamptons may also be feeling the flipside of recent price increases: Median rents for May were up 46% from May of 2019, before the pandemic. While the wealthy still have plenty of money to spend, they may be balking at the high rental prices, especially given the economic outlook.
“The assumption that rents would be sustainable at these elevated levels has been proven to be false,” Miller said.

And, strong home sales in the Hamptons during the pandemic may now be hurting rentals.
Vacationers who used to rent in the Hamptons wound up buying in 2020 and 2021 to have a more permanent getaway. The average sales price topped $2.6 million in the first quarter of this year, up 25% over the same quarter last year, according to Miller Samuel and Douglas Elliman. More buyers means fewer renters.
“The buyers removed themselves from the rental market,” Morabito said. “Now, all of the sudden the people who bought want to rent it and the renters aren’t there. So you have this huge surplus.”
Some brokers say they have seen signs of a pickup, as more last-minute renters start looking for deals.
“We had a lull from February to April, but now it’s picking up again,” said Gary DePersia of Corcoran. “The inventory we had is going.”
One of DePersia’s top rentals, however, is still on the market. The ultra-modern, 11,000-square-foot beachside property on Surfside Drive in Bridgehampton has nine bedrooms, a Gunite pool and spa, outdoor living room pavilion, pool house, gym and media room.
The roof deck features couches, a hot tub and retractable pergola. The rental price: $300,000 per week, or $1.25 million for the month of August.
“It’s a great house,” DePersia said. “We already have it rented for a week in June and we got what we needed to get.”
 

David Goldsmith

All Powerful Moderator
Staff member

City brokerages jockey for position in the Hamptons​

Flood of agents leads to increased competition over fewer listings​

When Terry Cohen began selling Hamptons real estate two decades ago, she started with the boutique firm Allan Schneider Associates, a shop she says was “all you ever need in the Hamptons.”
Then National Realty Trust scooped up the firm in 2006, absorbing it into its Corcoran Group subsidiary, and it lost its appeal. So when Saunders and Associates approached her, she jumped at the opportunity to once again work at a smaller firm.

But Saunders grew over time, putting Cohen back in the hunt for a more intimate brokerage. In May, the veteran agent joined Hedgerow Exclusive Properties, a luxury brokerage that opened in 2020 and is already making waves on Long Island’s East End.
“Less is more,” said Cohen, who has transacted over $2.5 billion worth of real estate in her career and came to Hedgerow as a partner. “This is an ever-changing world. We all know that. We always have to be dynamic, and you can be dynamic when you’re small. It’s hard to be dynamic when you’re so large.”
A wave of new brokerages has crashed upon the Hamptons and the North Fork in recent years. Along with Hedgerow, former Nest Seekers star Ryan Serhant is among the latest newcomers, expanding his eponymous firm to Water Mill earlier this year. National behemoth Compass entered the North Fork in March 2021 and in May of this year opened its first office there, with plans to grow its local agent count to 30 from six.
The mass arrival of city dwellers during the pandemic jolted demand in the region’s already expensive market and has led to a surge of brokers attempting to get in on the action. As of June, there were 1,587 licensed agents in the Hamptons, up 11 percent from 1,429 in 2017, according to research by The Real Deal.
“It’s like anybody with a heartbeat and a driver’s license can get a real estate license and come out to the Hamptons and get lucky,” said Cody Vichinsky, co-founder of Bespoke Real Estate, an eight-year-old firm that closed over $1.5 billion in deals in the Hamptons last year, including at least three of the region’s 10 most expensive home sales.
Bridget Elkin, the top-producing agent on the North Fork for Daniel Gale Sotheby’s Realty, joined Compass last year along with her husband, Eric, as the venture-backed brokerage’s founding agents in the area.
Cody-Vichinsky-quote.jpg

“We traditionally really needed that brick-and-mortar space,” Elkin said. “It makes it easier now for people to come in and kind of stick a few agents here and start doing business.”
Serhant said the lines surrounding where brokers want to and can operate have been blurred, allowing them to work with similar clients across several markets.
“The Hamptons is a very natural expansion market for us,” Serhant said. “It is the same Manhattan buyer and seller that we work with hand in hand.”

Gold rush​

Inventory in the Hamptons has deteriorated as fierce demand dominated the market during the pandemic, resulting in increased competition for a dwindling number of listings. In the first quarter of this year, according to a report by appraisal firm Miller Samuel for Douglas Elliman, only 671 homes were available for sale — or about one for every 2.4 licensed agents. That’s down 41 percent from 1,147 listings in early 2021 and a whopping 72 percent from 2,407 in the first quarter of 2019, prior to the pandemic rush.
Meanwhile, prices have skyrocketed. In the first quarter, the median sales price in the Hamptons was $1.4 million, up 61 percent from the same period in 2019, when it was just $850,000, according to Miller Samuel data. Homes that sold spent an average of just 90 days on the market, down from 138 days three years ago.
With commissions booming, most agents say they welcome the competition.
“I am always welcoming of great-quality brokers,” said Ed Bruehl, who began his career with Allan Schneider in 2003 and joined Saunders from Sotheby’s in 2015. “I’m not particularly keen when people come into a community they don’t know.”
Vichinsky said an increase in brokers doesn’t bother him, as he often sees the same names come up. “We do business together and we compete and we’re frenemies,” he said.
Many of the new arrivals have chosen to carve out a niche for themselves, rather than duel for any and all available listings. Hedgerow and Bespoke, for example, tend to focus on the luxury segment.
“They’ve decided to go after a small, top-of-the-pyramid slice of the market. More power to them,” Bruehl said. “It’s just that’s not the only thing I do.”
Newcomers to the area, of course, have yet to be tested by a cooling market. Amid rising interest rates and fears of a recession, many expect demand to at least normalize to historic levels in the coming months.
“The real, true test of a brokerage firm is being able to weather challenging times,” Vichinsky said. “But I’d rather have innovation and competition that’s really driving competitive advantages that are given back to the client, not just another body that’s selling real estate.”
 
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