The Hampton’s are famed for being a summer haven to the affluent of New York City seeking a break from the muggy, heat of the congested city, especially once the pandemic hit the U.S. back in March. Demand for longer rentals for Airbnb as well as traditional rentals has escalated, as Manhattan residents fled the city to seek summer refuge in a more remote location. This demand has inevitably led to a major shift in the market.
While the vacation rental industry has taken a hit during the pandemic —in May, Airbnb was forced to lay off 25% of its work-force—luxury rentals in the Hamptons have continued to increase, with wealthy renters and homeowners looking to quarantine out of the city.
“Those who had summer rentals already booked from July were seeing if they could start on May 1 and some have been extending their leases into the fall,” says Gary DePersia, a noted Corcoran broker who has specialized in Hamptons’ luxury real estate for over 25 years. “Those that already owned a home moved earlier. People renting for the whole season are more this year than any since 2007.”
The drastic increase in rental interest in the Hamptons has led to incredibly high rental prices, with some homes doubling in price—especially if renters were interested in a longer period of time.
DePersia notes, “If something was renting for $15,000 a month, it’s getting $30,000 now. I know of a couple of rentals that went for $400,000 for two months,” he says. “Overall, it’s up about 30%.”
For Airbnb, the pandemic caused a significant decrease in short- term rentals. Occupancy over the course of May was up 23.2 percent, but still down more than 30% compared to the same period last year, as indicated by AllTheRooms Analytics.
While Airbnb rental prices surge, it’s not just expensive listings that are skyrocketing. Reportedly, a couple from Jersey City paid $10,000 on a May rental for what the Times calls a “renovated fisherman’s shack” on Davis Creek in Southampton Town.
While luxury areas like the Hamptons previously had stricter policies that impacted seasonal tenants who rent out their homes for a month or longer, data from Zillow showed a 23 percent increase in listings for six months or less between March 1 and May 21.
Additionally, more owners of traditional long-term rentals appear open to leases between three and six months instead of typical year-long leases as a result of long-term uncertainty from renters, as reported by the Real Deal.
The surge of Manhattan’s elite moving temporarily into the Hamptons has also led to disputes with locals, who are nervous about further spreading the virus, especially as dining and outdoor entertainment begin to open again. Evidently, renters are also less interested in preferring specific areas for renting.
Peggy Zabakolas, also with Nest Seekers and a former participant on the Bravo TV show Million Dollar Listing, adds “Typically renters are interested in specific hamlets, however, now they are more open to different areas, even a bit more west like in Hampton Bays and West Hampton,” she says.
“Their biggest concerns are strong WiFi and outdoor space, because the majority of them will be working from home.”
For the aftermath of longer term rentals, the additional income has not come without concerns for landlords. New York state’s suspension on evictions also applies to the Hampton’s. The New York Times recently reported that property owners are worrying their tenants may refuse to move out when their lease expires and they won’t be able to evict tenants during the peak season, potentially losing hundreds of thousands of dollars in revenue. However, as demand is so high, most landlords are simply overlooking these concerns.
As for the future of the Hamptons and Airbnb? Agents describe bidding wars and notable lack in available rentals. The depletion of available rentals could be due in part to locals who typically rent out their properties are deciding not to this year. Also, rental laws passed by the state last year and coronavirus-related eviction moratoriums means that some landlords are more hesitant to rent. Identifying factors to watch in the market include fluctuations in rental prices going into the new year as well as interest in the length of rental periods, in a world that’s post-pandemic.