The Hampton rental market is facing an unexpected chill this summer.
After two years of strong demand and rising prices, the supply of rentals in the Hamptons is growing, leading to a wave of last-minute price reductions. Average rental prices fell 26 percent in the first quarter, according to Jonathan Miller, CEO of Miller Samuel. Brokers say some homeowners are cutting prices by 30% or more just to fill their properties.
“There’s a huge amount of equipment and people don’t rent it,” said Enzo Morabito of Douglas Eliman. “And it’s in all segments, from the lowest to the highest on the market.”
The weakness marks a dramatic and rapid turnaround for one of the most expensive and sought-after real estate markets in the country. In 2020 and 2021, tenants struggled to find summer rents and paid record prices months before the season for fear of missing out. Now brokers say there are still hundreds of rents for the summer.
Morabito said it was a beach rental that asked for $ 70,000 a month, but a potential tenant offered only $ 45,000.
“We hoped the tenant would split the difference, but now the market is different,” he said.
Living Room, 277 Surfside Dr., Bridgehampton, NY.
Source: 277 Surfside LLC Bridgehampton 11932
Brokers say lower demand is partly due to increased travel. Wealthy New Yorkers, who have spent the last two summers locked up in the Hamptons, plan to travel to Europe and other countries this summer as Covid retires. However, Europeans and other international tenants have not returned to the Hamptons.
The war in Ukraine, rising inflation and falling stock markets may also weigh on summer spending plans for the elite – especially since the Hampton market is so closely linked to the fate of Wall Street.
“There are a lot of questions in the air about the economy, both locally and nationally,” said Harald Grant of Sotheby’s International Realty. “It’s all affecting the market.”
The Hamptons may also feel the reverse of recent price increases: average rents for May rose 46% from May 2019, before the pandemic. Although the rich still have a lot of money to spend, they may oppose high rental prices, especially given the economic outlook.
“The assumption that rents would be sustainable at these higher levels turned out to be false,” Miller said.
Pool, 277 Surfside Dr., Bridgehampton, NY.
Source: 277 Surfside LLC Bridgehampton 11932
And strong home sales in the Hamptons during the pandemic could now hurt rents.
Vacationers hired in the Hamptons bought in 2020 and 2021 to have a more lasting escape. The average selling price exceeded 2.6 million dollars in the first quarter of this year, which is 25% more than the same quarter last year, according to Miller Samuel and Douglas Eliman. More buyers means fewer tenants.
“Buyers have withdrawn from the rental market,” Morabito said. “Now all of a sudden, the people who bought it want to rent it, and the tenants are gone. So you have this huge surplus.
Some brokers say they have seen signs of a pickup as more tenants start looking for deals at the last minute.
“We had a lull from February to April, but now it’s getting worse again,” said Gary Depercia of Corcoran. – The inventory we had continues.
However, one of DePersia’s best rents is still on the market. The state-of-the-art 11,000-square-foot Surfside Drive beachfront property in Bridgehampton features nine bedrooms, a Gunite pool and spa, an outdoor living room pavilion, a pool house, a gym and a media room.
Rooftop View, 277 Surfside Dr., Bridgehampton, NY.
Source: 277 Surfside LLC Bridgehampton 11932
The roof deck features sofas, a spa bath and a retractable pergola. Rental price: $ 300,000 per week or $ 1.25 million for August.
“This is a great house,” Depersion said. “We already hired him for a week in June and we got what we were supposed to get.”