Buyers flocked to the Hamptons during the pandemic, sending home prices soaring in the popular vacation hot spot.
To recoup their costs and even turn a profit homeowners have listed their tony mansions for astronomical rents over the last two summers. (Case in point: One oceanfront mansion, bought for more than $16 million last year, is now listed for $1.65 million for the month of July.)
But CNBC found that a glut of supply on the market after years of buying and falling demand as summer travelers head abroad after two years of the pandemic could mean Hamptons prices come crashing back to Earth this summer.
Some Hamptons homeowners are cutting their rental prices by "30% or more" to secure tenants for their properties, CNBC's Robert Frank reported.
Douglas Elliman broker Enzo Morabito told CNBC that there "is a tremendous amount of inventory, and people are not renting it." Another broker said that median rental prices in the Hamptons fell 26% in the first quarter, CNBC said.
According to CNBC, the collapse in Hamptons rental prices seen by some brokers is driven by two separate factors.
For one, a falling stock market, soaring inflation, and general economic uncertainty could be dampening demand for getaways in the Hamptons, long a home for Wall Streeters looking to escape New York City during the summer lull from Memorial Day to Labor Day.
A resurgence in trips abroad after a pandemic-driven surge in domestic travel could also mean fewer renters are looking to stay close to home for summer fun.
This May, Insider reported that Airbnb hosts in the US face similar challenges as demand for short-term rentals wanes after two years of pandemic-driven growth. Airbnb owners told Insider's Dan Latu and Daniel Geiger that high inflation, a pick-up in global travel, and increased numbers of hosts and listings are all contributing to a slowdown in bookings.
CNBC also reported that the past two years of frenzied home buying in the Hamptons likely means that would-be renters in prior years are now owners themselves.
"The buyers removed themselves from the rental market," Douglas Elliman's Morabito told CNBC.
To be sure, high-dollar rentals still have a home in the Hamptons. According to CNBC, another Bridgehampton beachfront house, just down the street from from the property listed for $1.65 million for July, is back on the market this summer for a monthly asking price of $1.25 million.
By: Carter Johnson I Business Insider Africa I June 2022