The rental market in the Hamptons is facing an unexpected cold this summer.
After two years of strong demand and soaring prices, rental supply in the Hamptons is surging, prompting a wave of last-minute price drops. According to Jonathan Miller, CEO of Miller Samuel, average rents in the first quarter fell 26%. Brokers say some owners are offering discounts of 30% or more just to fill their properties.
“There’s a huge amount of inventory and people don’t rent it,” says Douglas Elliman’s Enzo Morabito. “And it’s across all segments, from the very bottom to the top of the market.”
The weakness marks a rapid and dramatic reversal in one of the country’s most sought-after and highest priced property markets. In 2020 and 2021, renters scrambled to find summer rentals and paid record prices months before the season for fear of missing out. Currently, brokers say there are still hundreds of apartments for rent in the summer.
Morabito said he represents a waterfront rental apartment for $70,000 a month, but a potential tenant only offers $45,000.
“We were hoping tenants would split the difference, but that’s a different market right now,” he said.
Living Room, 277 Surfside Dr., Bridgehampton, NY.
Source: 277 Surfside LLC Bridgehampton 11932
Brokers say weaker demand is partly the result of increased tourism. Wealthy New Yorkers who have spent the past two summers living in the Hamptons are planning to travel to Europe and other countries this summer as Covid recedes. However, Europeans and other international tenants did not return to the Hamptons.
The war in Ukraine, rising inflation and a falling stock market could also weigh on elite summer spending plans — especially as the Hamptons market is so closely tied to the fortunes of Wall Street.
“There are a lot of questions being asked about the economy, both locally and nationally,” Harald Grant told Sotheby’s International Realty. “It all affects the market.”
The Hamptons may also feel the flip side of recent price increases: The median rent for May was up 46 percent from May 2019, before the pandemic. While the wealthy still have plenty of money to spend, they may be balking at high rents, especially given the economic outlook.
“The assumption that rents will be sustainable at these high levels has been proven wrong,” says Miller.
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 rentals.
Former Hamptons vacationers start buying in 2020 and 2021 for a more permanent getaway. According to Miller Samuel and Douglas Elliman, the average selling price reached $2.6 million in the first quarter of this year, up 25% from the same period last year. More buyers means fewer tenants.
“Buyers have removed themselves from the rental market,” says Morabito. “Now, all of a sudden the buyers want to rent it out and the tenants aren’t there. So you have this huge surplus.”
Some brokers say they’ve seen signs of a pick-up, as many last-minute tenants start looking for deals.
“We had a lull from February to April, but now it’s picking up again,” said Corcoran’s Gary DePersia. “The inventory that we have is going.”
However, one of DePersia’s top rentals is still on the market. This ultra-modern, 11,000 square foot beachfront property on Surfside Drive in Bridgehampton features 9 bedrooms, a Gunite pool and spa, outdoor lounge, pool house, gym and media room.
Rooftop view, 277 Surfside Dr., Bridgehampton, NY.
Source: 277 Surfside LLC Bridgehampton 11932
The terrace features loungers, a hot tub, and a retractable pergola. Rent: $300,000 per week, or $1.25 million for August.
“It’s a great house,” DePersia said. “We rented it for a week in June and we had the necessary things.”
