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As wealthy New Yorkers have sought a place to escape the coronavirus outbreak in Manhattan, they’ve looked no farther than Long Island’s eastern end – but surging demand has left even the upper-middle class unable to afford properties in the popular Hamptons.
“The Hamptons market has never seen such an influx of renters and buyers before. The supply does not meet the demand,” Peggy Zabakolas of Nest Seekers International and a former regular on "Million Dollar Listing" told FOX Business. “Upper middle-class renters are being priced out on homes that are already expensive to begin with, and that they already budgeted for.”
Zabakolas said rents for properties are up as much as 50 percent when compared with last year due to the coronavirus rush, as the 2020 rental season started months early.
Robert Nelson, Brown Harris Stevens executive managing director of the Hamptons, told FOX Business that the number of rental transactions is up 54 percent as people began “panic renting” in mid-March.
“After 9/11 we saw a flight of New Yorkers head to the Hamptons in search of more security, but we are busier now than we were back then,” Nelson said. “This is unprecedented in every way.”
But even before the pandemic prices in the area were on the rise.
As previously reported by FOX Business, during the first quarter of the year there was a substantial increase in multimillion-dollar sales in the Hamptons.
“Prior to the state-wide shutdown of real estate activity in March, the market was showing significant signs of strength, exhibited particularly in the sharp rise in the ultra-high-end market above $10 million,” Nelson said in a statement at the time.
Nelson told FOX Business that type of activity was “unusual” for the time of year.
Brown Harris Stevens just listed a $1.25 million seasonal rental, available from Memorial Day through Labor Day. The 3-acre property has 13 bedrooms.
While Zabakolas believes Manhattanites will return to the Big Apple once the threat from the virus has subsided, the trend of increasing prices in the Hamptons is unlikely to reverse.
One reason is that wealthy people who rented may take advantage of historically low interest rates to purchase a property. That way they have a permanent property to escape to, just in case.
But Zabakolas also said the new properties in the area are “super high-end and will only continue to get ritzier.”
“The land is very expensive to begin with,” she said. “Developers need to meet their margin requirements, and to do so, they are building full- amenity homes to entice the ultra-wealthy and support the price tag.”
The flight from Manhattan to the eastern end of Long Island initially upset local residents, as the towns were not prepared for summer-level population spikes as early as March. There were also concerns about a rise in confirmed COVID-19 cases.
In fact, a study showed rural towns with a high share of vacation homes were hit harder with confirmed cases than towns with more permanent residents.