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Agents See Still More Dollar Signs

By: Aurrice Duke
Published: 2/28/2007Source: The East Hampton Star

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 Unseasonably warm weather throughout December and parts of January brought many people to the East End with summer on their minds. But it was the Presidents Day holiday, the traditional start of rental foraging, that made many brokers here predict a "green" season.

    "That weekend was very strong," said Janet Weimar, an agent with the Corcoran Group's Montauk office, on Monday. "I was exhausted."

    "Rentals are starting to pick up again," said Penelope Moore, a senior vice president with Corcoran's Shelter Island office. "I've finalized leases with several repeat tenants from last year."

    Most real estate professionals who were interviewed said the rental market is stronger than it was last year and that activity started much earlier. "We started writing rentals in September 2006," said Judi Desiderio, the owner and a broker at Town and Country Real Estate in East Hampton, Bridgehampton, and Westhampton Beach, and on the North Fork.

    "It seems to me the weather contributed to an uptick in business, both in sales and rentals," said Gioia DiPaolo, a senior vice president at the Corcoran Group's Sag Harbor office.

    With housing prices stabilizing after years of rapid appreciation, potential buyers are tentatively re-entering the housing market, and in some instances renters and buyers are jockeying for the same properties.

    "Many of the homes for sale are also for rent," Ms. Desiderio said. "After last year's anemic sales activity, some sellers are leaving their options open and I'd have to say, buyers are beating renters, thus far, by 2 to 1."

    "Inventory is tight at all price levels," said Andrew Saunders, a broker with Sotheby's International Realty in Bridgehampton. As housing prices surged, many former landlords, especially those who had owned for many years, cashed out, and a number of houses that have sold are not being rented.

    Not surprisingly, past renters who paid these higher prices have become homeowners. HREO.com, a real estate Web site that features eastern Long Island properties exclusively, lists 12,081 rentals for the coming season.

    The highest-priced one is a Norman Jaffe-designed, oceanfront Southampton house priced at a stunning $800,000 for Memorial Day until Labor Day. For a fraction of that price, a renter could spend the month of July in a "comfortable contemporary" on Shelter Island or in a ranch near Clearwater Beach in Springs. The price for the latter - $8,000.

    The number of houses for rent is about the same as it was last year, according to Htun Han, a broker and owner of Hamptons Realty Group, which has offices in East Hampton, Amagansett, Water Mill, and Sag Harbor. Many brokers report that rentals in all price ranges are strong; however, most leases run between $40,000 and $80,000.

    The high-end rental market - properties priced at $400,000 and above - is also strong, but inventory is slim. "Everyone is beating the bonus drum," said Jason Schommer, a vice president with the Corcoran Group in Bridgehampton. "This certainly has a lot to do with it, but the underlying draw of the Hamptons location and lifestyle has just continued to grow in popularity, and that is the real growth engine for rental and sales on the East End."

    The easternmost tip of Long Island has always had a good rental market, Ms. Weimar said. Known for its prime surfing spots, Montauk has, for better or worse, caught the eye of real estate developers intent on introducing luxe vacation properties. "Middle-road rentals, priced at $20,000 to $25,000, are in the most demand in Montauk," she said. "But more people are looking for higher-end. We don't have a lot of oceanfront rentals available - maybe four or five."

    Rents for Memorial Day to Labor Day are typically less than 5 percent of a property's assessed value. As South Fork real estate values have escalated, the price for rentals has followed suit.

    "Rental prices are always a factor of the value of the house," Mr. Han said. However, "it's not always a good price-value relationship. I try to educate [homeowners], but often they don't listen." If the rental price is quite high, the house may not get rented for several seasons.

    "Most of our landlords have not raised prices this year," Ms. DiPaolo said.

    "When there was a run-up on rental prices, customers resisted," Mr. Han explained. "Now people have come to accept that the high prices are here to stay. They have adjusted their budgets to rent for shorter periods."

    "Everyone is primarily interested in being able to walk to a beach," Ms. Weimar said. "When those properties are gone, people will begin to look elsewhere - almost all of Ditch and Hither Hills are rented already."

    "Sag Harbor is the `it' town - no question," Ms. DiPaolo said.

    "If you want a pool and to be in the village, you don't have so many choices - those obviously go the quickest. I always say either the house has to be good or the location," said Mr. Han. "No matter how good the price is, if there are no amenities or if the location is poor, it won't get rented."

 

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