Beach house inventory rises, prices fall

The Hamptons rental market faced an unexpected chill this summer.

After two years of strong demand and soaring prices, rental supply in the Hamptons has surged, leading to one last wave of price cuts. Median rents fell 26% in the first quarter, according to Miller Samuel CEO Jonathan Miller. Brokers say some owners have slashed prices by 30 per cent or more to fill their properties.

“There’s a lot of inventory, and people aren’t going to rent it,” said Enzo Morabito of Douglas Elliman. “It’s across all segments, from the very low to the highest.”

The weakness marks a sharp and rapid reversal in one of the country’s priciest and most sought-after housing markets. In 2020 and 2021, renters are scrambling to find summer rents and pay record prices in the early months of the season to avoid missing out. Now, brokers say, there are still hundreds of rentals available for the summer.

Morabito said one of the beachfront rentals he represented was asking $70,000 a month, but a potential renter only offered $45,000.

“We want tenants to split the difference, but it’s a different market now,” he said.

Living Room, 277 Surfside Dr., Bridgehampton, New York.

Source: 277 Surfside LLC Bridgehampton 11932

Brokers said the weaker demand was partly due to increased travel. Wealthy New Yorkers who have spent the past two summers isolating in the Hamptons plan to travel to Europe and other countries this summer as the coronavirus subsides. However, Europeans and other international renters are not returning to the Hamptons.

The war in Ukraine, rising inflation and falling stock markets could also weigh on elites’ summer spending plans — especially since the Hamptons are tied to Wall Street’s fortunes.

“There’s a lot of questions in the air about the local and national economy,” said Harald Grant of Sotheby’s International Realty. “It’s all going to affect the market.”

The Hamptons may have also felt the flipside of the recent price increase: Median rents in May were up 46% from May 2019, before the pandemic. While the wealthy still have plenty to spend, they may be hesitant about high rental prices, especially given the economic outlook.

“The assumption that rents are sustainable at these high levels has been proven wrong,” Miller said.

Swimming Pool, 277 Surfside Dr., Bridgehampton, NY.

Source: 277 Surfside LLC Bridgehampton 11932

And, strong home sales in the Hamptons during the pandemic may now be hurting rents.

Vacationers who once rented in the Hamptons will end up buying in 2020 and 2021 for a longer vacation experience. According to Miller Samuel and Douglas Elliman, the average sales price in the first quarter of this year was more than $2.6 million, a 25% increase from the same period last year. More buyers means fewer renters.

“Buyers are pulling themselves out of the rental market,” Morabito said. “Now, all of a sudden, people who buy homes want to rent, and the tenants are gone. So you have such a big surplus.”

Some brokers said they were already seeing signs of a pick-up as more last-minute renters started looking for deals.

“We had a quiet period from February to April, but now it’s starting to recover,” said Gary DePersia of Corcoran. “We’re running out of inventory.”

However, one of DePersia’s top rentals is still on the market. Located on Surfside Drive in Bridgehampton, this ultra-modern 11,000-square-foot waterfront property has nine bedrooms, a fountain and spa, outdoor living pavilion, pool room, gym and media room.

View from the roof, 277 Surfside Dr., Bridgehampton, NY.

Source: 277 Surfside LLC Bridgehampton 11932

The roof deck features a sofa, hot tub and retractable pergola. Rent: $300,000 per week, or $1.25 million in August.

“It’s a great house,” Debos said. “We’ve rented it for a week in June and we’ve got what we need.”