In the good old days people thought you were crazy if you dared try to negotiate a Hamptons rental. If you couldn’t afford it, see ya later pal. There are plenty who could. Haggling was seen as a weakness, an embarrassment. Renters paid what landlords asked and that was that.
A lot can happen when banks go belly up. The stock market as of this writing is at 7,400, the country is the leader of a worldwide recession, and the prices of some of the choicest Hamptons properties for sale have been halved.
And those with cash are haggling. This has caused a slower start to the rental season, a push for lower prices and more creativity on the part of landlords looking to rent. James Keogh, a real estate agent at Prudential Douglas Elliman in East Hampton, explained, “What I’ve seen so far is that it is a bit of a slower start in terms of deals, but there have been a lot of inquiries about rentals.” How low will landlords go? While it is true that prices of rentals will be lower compared to last season, what’s the limit? Will the hagglers expecting a 40-50% reduction from last year get it? According to one landlord, “It’s not gonna happen. I’d rather enjoy the house myself.”
Another question in the market this year is: who, exactly, is renting? “We’re seeing a lot of the same types of people as last year,” said Keogh, “but they might want to rent for just a month, or split a rental with a couple. I think short term rentals are going to be huge this year.”
One demographic change this year is that there are fewer Europeans vacationers headed to our shores. Last year, thanks to a strong Euro against the dollar, Europeans came to the Hamptons to take advantage of the exchange rate. Now the dollar is much stronger against the Euro, and on top of that, financial markets and economic indicators in Europe say recession.
Many “serial renters” have also disappeared from the scene. One East Hampton homeowner, requesting anonymity, normally rents his home for $25,000 a month in the summer, and has had the same renter for the last five years. That renter opted out this year (he worked for hedge fund that no longer exists), so the house is on the market with no recent bites. “I understand that I’m not going to get what I got last year,” he said. “I’d really just like to figure out what the actual market value is instead of being in a stalemate.”
Which leads back to the pricing issue. “Landlords are somewhat flexible this year, but they must be willing to get the deal done rather than wait to make the last penny,” said Paul Brennan, the regional manager for the Hamptons at Prudential.
There are people with money who want to rent, but because of the economy, they’re doing their best to negotiate down. The real question is: Are they willing to miss out on a Hamptons summer? “Probably not,” says Keogh.
“The closer it gets to the season the fear of being in the hot city all summer sets in and somehow people will find the money to rent,” said Beth Troy, an agent at Town & Country Real Estate in East Hampton. On the issue of what is renting, Troy said, “There’s so much inventory that renters can get exactly what they want, where they want, if they’re willing to pay a fair price.” That includes Jersey Governor Corzine’s Sagaponack manse – $900K for the season.
And some of those folks want the North Fork, where top producer and Corcoran Senior Vice President Sheri Winter Clarry is used to haggling. “I’ve always found that renters have haggled, especially when they are going in early,” she said. Interestingly, Clarry has noticed another trend among who is renting: potential buyers who have become interested in renting instead, with intentions of buying next year – possibly on the North Fork.
“The North Fork market has never been as high in terms of price and in terms of percentage increases as the South Fork. I’ve been seeing a lot more people interested in buying here and wanting to learn about the area,” said Clarry.
On the South Fork, Troy concurred that the same is happening. “A lot of people are renting to position themselves to buy this summer. We all know that we’re either at the bottom of the market or very close, so the hope is, if you rent for a good price this summer you could be poised for the deal of the century – able to buy your perfect forever home in a place where most people only dream of living.”