The Hamptons are hot, until they’re not.
Anthony Berklich was looking to rent a simple three-bedroom house with no pool near Sag Harbor for the month of July for $25,000. The 37-year-old West Village resident, who runs the luxury travel platform Inspired Citizen, found the perfect summer rental and made a deal with the landlord. But the next day, someone else had already arrived, offered $5,000 above the agreed price, and the owner accepted without even checking to see if Berklich would match the offer.
“Before the deal was done, someone did the same thing to the next guy, paying $10,000 more than they asked, so the house sold for $40,000,” he sighed. “Frankly, it just wasn’t worth it, so I gave up the Hamptons this year.”
Instead, Berklich ventured further afield: to Croatia, where he scored a three-bedroom retreat for just $5,500 a month.
“I thought outside the box and found something with views of the Adriatic and a pool for a fraction of what I planned to pay,” he said.
His is a common story in the East End this summer, as many Hamptons homeowners expect highly inflated prices.
In the last two years during the pandemic, summer rentals in the Hamptons have increased 73.6%. And instead of blowing off steam, brokers and home hunters are complaining that homeowners have doubled down on their outrageous applications.
Earlier this year, Robert LaFond, a builder and designer who lives in the Boston area, planned to spend part of the summer with his girlfriend, who lives in New York. After looking at eight residences in the East that he felt were in disrepair or in poor locations, they found a beautiful home in Southampton that was a bit dated, but had lush gardens and a nice pool. He was asking for $60,000 and they agreed on the price.
The next day, when they gave her broker the details for a lease, she called and explained that the owners had done some thinking and decided that her house was actually worth $80,000 during that period. The listing was quickly adjusted to reflect the new price.
“I was so alienated that I decided to look for something in New England,” LaFond said.
But out of curiosity, he followed the price and watched as the owners progressively lowered it, down to $75,000, $65,000, and ultimately back to $60,000.
Unsurprisingly, Compass agent Diane Shifman said the rental market in the Hamptons has been slow this season.
“I usually do about 50 rental leases every summer and this year I only did 20,” he told The Post, noting that an uncertain stock market and high gas prices also contributed to the lack of leasing. “It appears that tenants were frustrated with high rents, and landlords who have done so well in recent years were not ready to lower those levels. A balance needs to be found to get the market back on track and we have started to see a bit of an easing.”
Recent reports show that prices are beginning to decline, with rentals down about 30% since Memorial Day, according to Douglas Elliman, the time when rental prices traditionally fall as the season begins. of summer with the best properties that are spoken of.
“The rental market is coming off the increase in prices that we saw last year, but when you look at the pre-pandemic as a base, rents are still up 36%, which shows the disconnect that the last few years have had. from sustainable levels,” said Jonathan Miller, CEO of Miller Samuel Inc., author of the Douglas Elliman market reports. “Transaction volume is only half of what it was last season.”
Raymond Smith, manager of Douglas Elliman’s Southampton office, agrees that owners need to face the new reality.
“People got excited about COVID and raised prices too high and tenants said we’re not willing to pay,” he said. “There was a property in the town of Southampton that the owners listed at $350,000 a season, but before COVID it was worth $150,000, maybe. A lot of homeowners did very well then, but reality comes and every house that is priced right is rented out.”
Now that the European Union and the US have eliminated test requirements for travel, the Hamptons face real competition from overseas destinations. According to brokers, European and Caribbean destinations are the most popular alternatives to the Hamptons this summer.
“My agents tell me that smart clients ask about renting Russian-owned houses in Lake Como and Forte dei Marmi because they know the owners aren’t using them and can’t sell them right now because of the Union crackdown. European,” he said. Lee Sommers from Compass.
One hot spot is Passalacqua, a converted historic home that opened on Lake Como this month, with a 60-foot pool, water views, and 24 suites that start at less than $1,000 a night.
Luxurious islands like Bermuda are also popular. At Rosewood Bermuda, a two-bedroom suite costs $88,000 for July and August.
At the St. Regis Bermuda, which has a pool, spa, and golf course access, you can get a two-bedroom for as little as $1,000 a night and a three-bedroom for $1,600. Good luck finding anything fancy in the Hamptons at that price.
Sommers said he was recently asked to list an international client property in the Hamptons and refused.
“It was a $1 million summer rental and I refused,” he said. “However, I agreed to include your house in Provence!”