With most of the tri-state area mired in the depths of winter, city slickers hoping to spend the warmer months in luxurious style near the beach are eyeing a rapidly approaching horizon.
Ed Bruehl of Saunders & Associates in East Hampton said renters with bigger budgets tend to be the early birds in snapping up elite East End digs.
“The best, A’s, always rent early, in December to February. The B’s go after, and the C’s go last-minute for shorter-term rentals,” Bruehl said.
The Corcoran Group’s Ashley Farrell said she received a deluge of emails after the holidays, with city clients taking early-winter trips to the East End to scout out potential properties. Corcoran alum Cody Vichinsky, who started Water Mill-based Bespoke Real Estate in 2014, said he closed a $1.2 million deal in January for a five-week rental in East Hampton.
“A lot of our clients that are renting high-caliber assets, they start their search early,” said Vichinsky, noting that Valentine’s Day tends to be the demarcation point between proactive renters and those less serious about their Hamptons summer plans. “Those following three months, you get some stragglers, and then there are more people who I would [call] the gambling bunch. They wait until the last minute.”
The good news for the “A’s”? A surge of new sales listings has helped depress high-end Hamptons home prices, which in turn means many of those listed homes are getting rented out for the summer. Brokers are seeing motivated renters mull their options early thanks to a glut of inventory.
In the fourth quarter of 2018, the Hamptons had a 35 percent decline in closed sales compared to the same period a year prior, according to Douglas Elliman and appraisal firm Miller Samuel. The plunge in purchases, the largest in a decade, came as listing inventory soared 82 percent, with 2,197 homes for sale in 2018 compared to 1,208 over the same period in 2017.
At press time, there were more than 100 full-summer rentals available in excess of $2 million, according to Out East, a Hamptons real estate site whose predecessor was acquired by StreetEasy parent Zillow Group in 2017.
Bruehl noted that smart investors can use renters to their advantage by buying time to allow market conditions to improve.
“[Homeowners] can go long on a property that carries itself and makes them a little bit of money, and when the buyers come back in a year or two, sell it at a profit in a market that has real buyers, rather than the hesitant buyer looking for a steal of a deal,” Bruehl said.
Both owners and renters can benefit from such a plan.
One Bruehl client, whom he declined to name, was unable to sell an East Hampton home for its $4 million asking price. The seller was wary about renting — perhaps, Bruehl said, spooked by stories of hard-partying beachgoers. Ultimately, though, the seller was pleased to get $289,000 for a summer rental.
Many Hamptons homeowners have experienced — or at least heard about — disastrous situations involving rowdy renters and guests who trash a property. For these owners, it’s worth paying a broker to avoid returning to an abode with potentially catastrophic damage, said Saunders’ Drew Green in Southampton. “The six-figure homes are still the domain of real estate brokers, but lesser homes are certainly more popular in the Airbnb and VRBO categories,” he said.
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Green is one of several brokers who have noticed a rise in short-term rentals. So far this year, he’s had more clients seek two-week terms than the usual month or even full-summer season. “Short-term rentals have become the fad,” said Green, adding that he expects that trend to continue.
Renters looking to snag a South Fork rental do have a variety of ways to find one. Airbnb and HomeAway’s more upmarket VRBO continue to do business on the East End, although brokers, not surprisingly, believe both sites are a less appealing proposition to luxury homeowners and renters.
“[Luxury] owners want an agent to make sure that they’re getting quality tenants and run a check on who is renting their home,” Green said.
But home-sharing sites aren’t going away. Airbnb had approximately 80,000 guest arrivals in the Hamptons last year, up from 58,000 in the summer of 2017, the company told The Real Deal. The service also had 2,600 Hamptons hosts in 2018, up from 2,100 a year earlier, who made $40.1 million, an average of $9,800 per homeowner. The most popular places for Airbnb rentals were Southampton, which experienced a notable spike in 2018, likely due to the U.S. Open golf tournament at the Shinnecock Hills Golf Club, followed by Sag Harbor, Montauk, Hampton Bays and Greenport on the North Fork.
This year, Hamptons rental brokers are seeing a loosening of renter rigidity when it comes to choosing specific towns. Vichinsky said he’s noticed that clients are less fixated on places like Southampton. “I think a lot of people are being driven by product or program,” he said. “If Southampton is where they want to be, but there’s nothing there that fits their needs, they’ll widen their approach.”
Bruehl was shocked to see a couple looking to spend $300,000 and inquiring about homes in Springs, the north-of-the-highway hamlet within East Hampton.
“Fifteen years in the business, no one has ever [asked me about] a premium Springs rental,” he said. “That Brooklyn buyer now thinks the Springs is cool.”