‘It’s the opposite of last year’: the Hamptons’ shifting property market

Memorial day weekend, the traditional opening of the Hamptons summer season, and at Blade, the New York-headquartered booking platform for jets, helicopters and seaplanes, the surge is on.

Last weekend was the company’s busiest of the year. It flew thousands of customers from the city to airports in the Hamptons or by seaplane to Sag Harbor Bay, replacing the two to three-hour drive that can stretch to four or five when vacation traffic — or accidents — clog up the roads.

The company had been preparing for weeks, hiring seasonal workers and guiding them through training, says Rob Wiesenthal, Blade’s chief executive. “We fly the most demanding passengers on the planet: new staff need to hit the ground running for such a busy time.”

But those arriving at the wealthy cluster of seaside enclaves on the eastern tip of Long Island will find a property market much changed from last year.

In the wake of pandemic lockdowns, demand for homes in the Hamptons rocketed as New Yorkers sought an exit from the cramped and closed-down city. Median sale prices increased from $850,000 in the first three months of 2019 to $1.4mn three years later, according to Douglas Elliman estate agents. Freed by homeworking, some decided they would relocate to the area full-time, returning only occasionally to their offices in the city.

A year on, it’s a very different picture. Rising mortgage rates and fears of lay-offs in the finance and tech sectors have severely dented buyers’ appetites to commit to a purchase, even as the number of homes for sale has increased. In the first three months of 2023, just 171 homes sold in the Hamptons, fewer than half those sold in the same period last year, according to Douglas Elliman, while listings increased from 671 to 894. The median sale price has fallen 2.9 per cent to $1.36mn.

Last summer, owners looking to rent out their properties for the whole season from May to September could practically take their pick from competing bids. Today, a glut of homes on the summer rental market — many bought by owners during the pandemic-era boom — is driving down the cost of spending the next few months by the beach.

Suzanne Olivia had budgeted up to $35,000 for a family rental she wants to take in August. She says she’s being peppered by her agent with suitable homes for as little as $20,000.

“In the past, properties by the ocean have been so hard to find, but this time he has found so many that are well within our budget,” says Olivia. The family recently acquired a puppy. “So many listings have said no dogs but when our agent contacts them they say they are happy to take them.”

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Drop in home sales in the Hamptons between the first quarter of 2022 and the first quarter of 2023

It’s a far cry from last year, when she patched together several trips via a hotch-potch of short-stay websites including Airbnb and Vrbo, without a single stay within walking distance of the ocean. “It was genuinely hard to find a place for a month, places were super expensive and everything was sold out.”

The number of Hamptons homes listed on Vrbo and Airbnb increased from 2,911 in April 2022 to 3,557 in April 2023 — in the town of Amagansett listings have increased by 38 per cent, according to AirDNA, which tracks the short-term rental market.

“Summer travel patterns in the New York area have shifted from . . . renting homes from Memorial day to Labor day [in September] to micro-vacations of multiple three to five-day trips,” says Wiesenthal of Blade.

“It’s the opposite of last year,” says Martha Gundersen, a local agent with Douglas Elliman. “[Tenants] would pay anything because they were desperate and there was nothing available; today, new rentals are coming to the market every day and [landlords] will take anything in rent.”

Early in 2022, a client of her son, Peter Gundersen, also a local agent, rented out their East Hampton home for $400,000 for the summer season. In November, they had an offer of $100,000 for July, which they turned down. “And they haven’t had another offer, basically due to how much supply is out there,” he says.

“Last summer, I was fortunate to have one person for the whole season; all I had to do was give him the keys,” says Melody Thayer, who rented out her four-bedroom home in Bridgehampton, on a 1.5-acre plot with a pool, between Memorial day and Labor day for $165,000. She left for a summer, visiting family in Colorado, went on a cruise up the St Lawrence River and had an extended stay in New England.

A few weeks ago, she turned down a booking that spanned last weekend because the price was too low. Besides two weeks in June, where she is renting the home to friends at a reduced rate, she currently has just six weeks booked across July and August.

“This year people are definitely lowballing [their offers]. Now Covid is over, people are going to Tuscany or the south of France. I would be too,” she adds.

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The dip in the Hamptons’ property market coincides with a shift in how owners are using their homes, as many who saw themselves living in the area year-round return to New York. With white-collar workers increasingly being required in the office, what does life in the holiday-home hotspot tell us about New Yorkers’ enduring enthusiasm for out-of-city living?

Jay Schneiderman, supervisor of the Town of Southampton, an enclave of about 70,000 residents to the west of East Hampton, divides pandemic-era homebuyers into two camps. On the one hand are those who always planned on a permanent relocation — many of them younger buyers purchasing lower-priced family homes — who have, for the most part, stayed. On the other are older, richer individuals, who favoured larger houses and who have, on the whole, returned to the pre-pandemic pattern of basing in New York and coming for the summer season.

Sag Harbor appeals to many in the first group, he says. “They can live wherever and want to bring up their families in areas where the [school] class sizes are small and there is a high quality of life.”

The village has a strong community feel, borne of a long-established, dense population dating from its roots as an important local port; in 1789, it berthed more commercial vessels than New York City, according to the Sag Harbor website. Already featuring a large permanent population, it was attractive to those seeking a sense of community and year-round services.

Across its three schools, the number of children living outside the district boundary almost doubled between 2019 and this academic year. Jeff Nichols, superintendent of Sag Harbor school district, says most of these are from families who settled permanently in the wider area since the start of the pandemic. “It seems the majority who arrived had work arrangements that could flex, and have stayed,” he says.

In East Hampton, it’s a different story. Bigger plots and higher prices attract more affluent buyers, meaning the town has retained a more seasonal identity.

During the pandemic, widespread relocation to Southampton brought challenges. “Early on I got a lot of complaints from people trying to work from home — including heads of corporations — who were frustrated by the lack of bandwidth,” Schneiderman says. Services have improved since then thanks to work by local providers and two more cell phone masts should be in place by the end of the year, he says.

But for Sarah Alvarez, remote working on her New York job as a mortgage broker has proved smooth. A summer visitor to the Hamptons throughout her youth, she moved to her family home for the early months of the pandemic and, after a stint back in New York, returned full-time in January, taking a rental home in East Hampton, where she and her boyfriend are looking to buy.

I need to be in New York for work. We’re city people: we never contemplated a full-time move

“I can work entirely from home,” she says. “For the price of a one-bed apartment in the city, we have a three-bedroom, two-bathroom house with a fabulous yard on an acre of land. And, now, after the pandemic, I really enjoy the simple things: the outdoors, the beauty and the peace and quiet.”

But for many, living in the Hamptons full-time never felt like a viable long-term option.

In March 2020, Laura Rebell Gross, her three teenage daughters and the family dog left New York City to stay with her mother in East Hampton. By June, the family were renting their own house in Amagansett and, in October, they bought a four-bedroom house there.

Today, the family is back living permanently in Brooklyn. “We have three kids at high school here and I need to be in New York for work,” says Rebell Gross, who oversees a network of all-girls’ public schools in the city.

It’s not that life in the Hamptons during those years didn’t have its benefits: “The epic hikes, stolen time with our teenage daughters, the ocean all to ourselves,” she says. “But we’re city people: we never contemplated a full-time move.”

Most of those who chose to make a permanent move to the Hamptons could afford to do so because they continued to work at high-paying jobs in the city. By contrast, local workers staffing the towns’ key sectors cannot afford a local home and face ever-lengthening commutes.

In Sag Harbor, Nichols says that the scarcity of affordable housing combined with increasingly congested roads means the number and quality of applicants for vacant teaching positions are falling. “That is the case with all personnel, including bus drivers, custodians [maintenance workers], cleaners and so on,” he says. “It has been a problem for years but the situation continues to get tighter.”

Chase Mallia has been teaching in the Hamptons for 13 years. When he bought his first home in East Moriches, a small hamlet on the western edge of Suffolk County, in 2014, he spent about 1 hour 45 minutes every day driving 30 miles to and from his school in Sag Harbor. Today the round trip takes roughly 3 hours and 15 minutes — which can easily stretch to 4 hours if there is an accident at one of the squeeze points on the route, he says. Thanks to additional train services, which get him to school in time for class, he can now make the journey quicker by rail. “But the train times don’t work for all teachers in our district.”

Even before Memorial day, roads have been clogging up with the so-called “trade parade” — construction and service-related professionals on their way to prepare or maintain the fabric and surrounds of Hamptons homes ahead of their owners’ arrival.

Together with increased materials prices, the difficulty in finding good local tradesmen is escalating construction costs and contributing to significant budget overruns, according to Michael Lomont of local architects Stelle Lomont Rouhani. “One guy dropped out and the general contractor had to find a replacement, who charged 30 per cent more,” he says. “It’s not surprising, when some contractors are spending three hours per day getting to and from work.”

Councils are battling the same obstacles in attracting staff, slowing building approvals. “We are overwhelmed in our building department; it is very difficult to find qualified employees,” says Schneiderman in Southampton.

“A [construction] permit that took six weeks to get before the pandemic takes more like 16 weeks now,” says Lomont.

Despite the added pressures — and the downcast property market — many leaving New York for the Hamptons a week ago are planning a summer more like 2019 than the during pandemic years.

In preparation for her Memorial weekend drive, Rebell Gross loaded the car with a new raft for the swimming pool, ice water and some snacks — with a few work calls scheduled — to take her through the long car journey.

For her, this year marks a return to the traditional family Hamptons rendezvous: besides her husband and daughters, she will be joined by her parents, flying down from Florida, and her siblings’ families, including nieces and nephews.

“I’m really excited,” she says. “Tomorrow morning I’ll be going on my favourite run through Napeague State Park, meeting my husband with the dogs at Lazy Point Beach. It’s just total peace — a complete escape from the city. It’s our happy place.”

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