Hamptons Rental Season Starts Early
A nine-bedroom beachfront house in Southampton is being offered as a full-season summer rental for $2.5 million. Credit Corcoran Group [Tim Davis]
Although some early birds can be counted on to buck the trend, most people seeking summer rentals in the Hamptons tend to start their search around Presidents’ Day weekend in mid-February, real estate agents say. But inquiries for the summer of 2016 started coming in much sooner, some as early as October and November of last year.
“People were decisive about renting a solid three months before normal,” said Andrew Saunders, the president of the real estate firm Saunders & Associates, which handled more than 500 rentals in the Hamptons last year.
Balmy fall temperatures, which continued off and on into December, helped jump-start the rental season, brokers said, as more New Yorkers found themselves driving out to eastern Long Island for a weekend getaway well into late fall.
“I think people were already out here for other reasons because the weather was so good,” said Erin Keneally, an agent in the Bridgehampton office of the Corcoran Group. “So they killed two birds” with one stone, she said, “by looking for a summer rental and hanging out with friends.”
Another view of the Southampton house. Credit Corcoran Group [Tim Davis]
Ms. Keneally said it was much easier to show homes when there is little snow or freezing temperatures, especially if their pools have not been covered yet or the outdoor furniture taken in. So far, she has doubled the number of early bookings compared with previous years, she said, without providing specific numbers.
The weather was not the only factor. Anxiety over terrorist attacks in Europe made some repeat renters, especially those who work on Wall Street and keep close tabs on global news events during the trading day, nervous about spending time overseas. These travel concerns also may have helped fuel the early start, Mr. Saunders said. Many high-end homes with leases of $200,000 to $400,000 for a full season have been snatched up earlier than usual, he added. Inventory, though, remains good, with hundreds of homes available in that price category.
Jonathan Davis, an agent at Compass, said he found it rather odd when a client called him in November asking for a full-season rental, which covers Memorial Day through Labor Day. The client, a hedge fund manager who is married with three children, had always rented a home in East Hampton for the month of July, and usually took off for France in August.
“When I asked my client why he was changing his usual plan, he said he was nervous about taking his family to France,” especially after the November terrorist attacks in Paris, Mr. Davis said. “I don’t blame him; I feel nervous about going to Europe, too,” he added. The client leased a five-bedroom East Hampton home for $250,000 for the full season.
Nicholas Colas, the chief market strategist for the Manhattan brokerage firm Convergex, said most Wall Street professionals don’t take much vacation, so when they do, they try to make it count.
“With parts of Europe battling all kinds of things — a weak economy, a migrant crisis and terrorist attacks — there’s a lot of concern on Wall Street about security and the political climate,” said Mr. Colas, who is the author of a Hamptons summer rental report that takes a look at the fortunes of those who work on Wall Street and how they affect the high-end rental market on the East End of Long Island.
“From what I sense at work and in the Hamptons, security concerns are trumping foreign exchange rates,” added Mr. Colas, who has had a home in Southampton for about 20 years. He noted that when the dollar is stronger than the euro, or close to its value, as it is now, it is less expensive — and normally more attractive — for American vacationers to head to Europe.
A December report by the CMO Council, a global executive network, along with the GeoBranding Center and AIG Travel, found that of more than 2,000 prospective travelers in an online survey, most of whom lived in North America and Europe, one out of four had altered travel plans in the past year because of safety and health concerns. Of this group, 83 percent said terrorist activity was their main reason for avoiding certain areas, while 49 percent feared military conflict or fighting.
“I think the fear of travel is more than anecdotal,” Mr. Saunders said. “People are concerned about getting on a plane and going to France. Not since post-9/11 have I heard so much concern about safety.”
Meanwhile, the prices of Hampton homes, both for sale and for rent, have rebounded since the recession. The average sales price of a Hamptons home was $2.38 million for the fourth quarter of 2015, up 15.6 percent from the $2.06 million for the same period of 2014, according to the latest report from Douglas Elliman Real Estate.
Rental figures are hard to analyze, because the Hamptons real estate market does not have a centralized data management system. Mr. Colas estimated that the median asking price for a Hamptons rental in 2015 was about $45,000 for the full season, unchanged from 2014, but up by about $10,000 from five years ago. More significantly, as of Feb. 4, seven homes were listed on Hamptons Real Estate Online for $1 million or more for a full season and one nine-bedroom home in Southampton was asking $2.5 million for the season, figures unheard-of just three years ago. Eight homes were asking $1 million or more either for the month of July or for August through Labor Day.
The Hamptons market largely mirrors regional trends, but price increases there are also linked to the performance of Wall Street. And in the last five years, money made from deferred Wall Street bonuses that flowed into the Hamptons market was a huge factor, Mr. Colas said.
After the recession, many financial institutions asked their employees to take company stock instead of cash bonuses, which they couldn’t sell for a few years, dampening the Hamptons real estate market until 2011. Setting aside recent stock market volatility, this action turned out to be a windfall for those employees, because shares of bank stocks have been strong since the end of the recession, Mr. Colas said. As of Feb. 3 the KBW Nasdaq Bank Index had risen about 13 percent over the last five years.
“When Hamptons real estate, which has such a limited supply when compared to Manhattan, saw all the liquidity from money made from deferred bonuses, prices went higher,” Mr. Colas said.
Beate V. Moore, an associate broker in the Bridgehampton office of Sotheby’s International Realty, said rental inquiries so far have been about the same as in previous years. But she was happy to be able to rent out a seven-bedroom home in Sagaponack last fall for $400,000 for Aug. 1 through Sept. 15.
“It’s an unusual rental because the home is off the water and doesn’t have a tennis court,” she said. “Many of my high-end clients always want to upgrade from what they had the previous summer, so they start early.”
Marcy Bloom, a publishing executive who lives in Manhattan, is feeling the pressure to find a suitable summer rental. After looking to buy a summer home in the Hamptons for the better part of last year and not finding one to her liking, in December Ms. Bloom called the owner of her previous rental in Water Mill, N.Y., to see if she could lease it for the summer.
To her dismay, the five-bedroom home had already been rented to someone else.
“I was devastated,” Ms. Bloom said. “I was absolutely in love with that house.”
Now, she added, “I keep swinging back and forth between searching for sales and rentals, but I know I need to move quickly.”
Copyright © 2016 The New York Times Company. Reprinted with Permission.