Those of us expecting a return to ever-rising prices in the hamptons real estate market are in denial. With the explosion of Airbnb and other short-term rental market hosts, the traditional interaction between local property owners and renters has entered us into a new dimension.
Consider, historically, property owners on fixed incomes use hefty summer rentals to make ends meet, and simply moved elsewhere for the summer season. But certain neighborhoods became overly congested; the towns, pressured during the shared-house heyday (with Montauk as its epicenter) to crack down on party houses, moved to limit summer rentals, both in duration and in the number of people.
The towns also established rental registry rolls so authorities would be able to identify would-be abusers and verify legal summer rentals.
A fair number of locals moved away, (Hello, North Carolina!) but many held on. With summer rentals declining because of the increased scrutiny by the towns, though, the cash crunch accelerated, and sale prices began to fall. Without the income of a healthy summer-long rental, some folks who are downsizing were left short on cash. Thus, they put their houses on the market and the glut, caused asking prices to go down further.
Of course, the bank meltdown of 2008 is the one event that cast the knockout blow, but all the above factors have contributed to the slow recovery of the real estate market out here.
Let’s face it – Airbnb and similar sites have been a godsend to property owners. At the same time, banks and real estate companies, for the first time, are completely out of the loop. Thousands of rentals are negotiated and take place outside their domains. It’s a shocking turn of events.
The town could go undercover and cite illegal renters. Is that what property owners want? Do they want this valuable income stream closed? Or are the towns deliberately looking the other way?
The recent fourth quarter 2019 numbers, though trumpeted by some analysts, show every indication of the eternal optimist who thinks he’s gone to heaven because his shoes are on fire instead of his head. “Just keep watching,” the devil tells him.
According to the Elliman report, “There were 27 sales at or above $5 million in 2019, which was the lowest total in a decade. Sales increased only to their second-lowest fourth-quarter total in 11 years. Year to date, the number of sales fell.”
This is not a recovery, folks. It’s a final warning. We need to give buyers a reason to buy, and that reason is a receptive summer rental market that will pump value back into the properties. And we need to allow local rental agents to get in on the action by allowing them to compete with the likes of Airbnb and others that right now operate with impunity.