The rental market in the Hamptons is facing an unexpected chill this summer.
After two years of strong demand and rising prices, rental supply in the Hamptons is increasing, triggering a wave of last-minute price cuts. Average rental prices fell 26% in the first quarter, according to Miller Samuel CEO Jonathan Miller. Brokers say some owners are slashing prices by 30% or more to fill their properties.
“There’s a tremendous amount of inventory and people aren’t renting it out,” said Enzo Morabito of Douglas Elliman. “And it’s in all segments, from the very least to the top of the market.”
The weakness marks a dramatic and rapid reversal for one of the nation’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 still hundreds of rentals available for the summer.
Morabito said he represented a waterfront rental that was asking $70,000 per 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.
Living Room, 277 Surfside Dr. Bridgehampton, NY.
Source: 277 Surfside LLC Bridgehampton 11932
Brokers say the weak demand is partly a result of increased travel. Wealthy New Yorkers who have spent the past two summers in the Hamptons are planning to travel to Europe and other countries this summer because of the Covid shortage. European and other international renters, however, have not returned to the Hamptons.
War in Ukraine, rising inflation and falling stock markets could also weigh on elite summer spending plans – especially since the Hampton market is so closely tied to Wall Street’s fortunes.
“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 affects the market.”
The Hamptons may also be feeling the flip side of the recent price hike: 46% of the average rents for May were up from May of 2019, before the pandemic. While the wealthy still have a lot of money to spend, they can depend on high rental prices, especially given the economic outlook.
“The notion that rents will be sustainable at these high levels has been proven wrong,” 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 hurt rentals now.
Rental vacationers in the Hamptons took off shopping for a more permanent getaway in 2020 and 2021. According to Miller Samuel and Douglas Elliman, the average selling price in the first quarter of this year is above $2.6 million, up 25% from the same quarter last year. More buyers means fewer renters.
“Buyers removed themselves from the rental market,” Morabito said. “Now, all of a sudden the people buying it want to rent it and the renters aren’t. So you have this huge surplus.”
Some brokers say they have seen signs of a pickup as more last-minute renters look for deals.
“We had a lull from February to April, but now it’s on the rise again,” said Corcoran’s Gary DePersia. “The inventory we had is going away.”
However, one of DePersia’s top rentals is still on the market. The ultra-modern, 11,000-square-foot beachfront property on Surfside Drive in Bridgehampton has nine bedrooms, a gunite pool and spa, outdoor living room pavilion, pool house, gym, and media room.
View from the Rooftop, 277 Surfside Dr. Bridgehampton, NY.
Source: 277 Surfside LLC Bridgehampton 11932
The roof deck has sofas, a hot tub, and retractable pergola. Rental Price: $300,000 per week, or $1.25 million for the month of August.
“It’s a great house,” DiPersia said. “We’ve already rented it out for a week in June and we got what we needed to get by.”