Sales, Damp Weather Bring Lull In Rentals

This is the first article in a series that will examine various aspects of real estate on the South Fork.

With summer almost backed up to the Manorville exit on the Long Island Expressway, you'd expect last-minute renters to be cutting each other off at the front door of real estate offices as if they were in the Reutershan parking lot on the Fourth of July weekend.

But they are not, and that may spell disappointment for Mr. and Mrs. John Q. Ordinary-Ranch-House-With-Pool, who have been hoping to cash in on the annual summer rental bonanza.

"It has not been the kind of mob scene that we are used to," said Stuart Epstein of Devlin-McNiff in East Hampton. "In years past, I would come into work and there would be times when there were no seats in the office. It was like a bakery. 'Take a number.' "

Spring Wave A Washout

Diane Saatchi, who heads Dayton-Halstead in East Hampton, agreed with other brokers that "when it all shakes out, business will probably be about the same as last year," but she, too, has noticed a slowdown in activity this spring.

"The season began as early as August, when people either re-rented or made deals for this year," she said. While the market remained busy through the Christmas holiday, "that second wave" of business usually seen in early spring "didn't come this year."

John Keeshan, a Montauk broker, was blunter. "In a nutshell, if anyone tells you the market is alive and flourishing, they are blowing smoke," he said.

Quiet Since Mid-March

While Mr. Keeshan, too, did brisk business early in the year, since mid-March, at least in Montauk, "the market has taken a slump. That's a good way to describe it. I haven't heard that word used for a long time."

However, said the veteran broker, "it does show signs of getting back on track." While business is about a third behind last year's levels, "it won't take long to take up that slack," he said.

"What will happen, God willing, is spring will hit like an explosion and everyone will say, 'I've got to get my summer rental.' "

Brokers offered a variety of reasons for the lull. Some said there was a glut of rental houses on the market. Others said prices, which have risen 5 to 15 percent since last year, have scared off some renters and caused others to hold off, hoping for late bargains.

Still others pointed to a strong sales market which has seen many longtime renters take the plunge and buy their own weekend getaways.

Weather, as Mr. Keeshan said, may also be a factor. "There's been rotten weather on the weekends, which can discourage people from coming out," said Frank Newbold of Sotheby's International Realty.

Ms. Saatchi said renters may remember last summer "when it was damp, cold, and crowded in the village. They may not want to do that again."

Scared Off?

Some raised the possibility of too much good publicity.

"There were a number of press reports of a gangbuster rental season," said Mr. Newbold, referring to stories in The New York Times and elsewhere that said Wall Streeters, their pockets flush with year-end bonuses, were gobbling up every last morsel of rental property.

"The only thing that has scared people is the perception that our rental season is so great," said Peter Hallock, the president of Allan Schneider Real Estate.

"They say, 'Let's do something else this year because the Hamptons are taken.' "

One broker said this year's strong sales market had seen many longtime renters buy their own weekend getaways.

"They gave the message, 'If you haven't rented it's too late,' " Mr. Newbold said. "Now we're getting people calling and sheepishly asking if there is anything left."

There's Plenty Left

There is. Even though Mr. Hallock said his firm has had a "very strong season," he stressed that "there are a lot of great properties available. I'd say there are over a thousand available, from the Shinnecock Canal to Montauk."

While Mr. Hallock said East Hampton oceanfront was "virtually impossible" and Ms. Saatchi said such expensive jewels "seem to go very quickly," Mr. Newbold disagreed. "There's a bit of everything available, including estates south of the highway," he said.

Even with more than enough houses to go around, prices remain firm. A reasonable, but not outstanding three-bedroom, two-bath house with a pool in Northwest Woods or Springs will cost "minimally in the 20s, and probably closer to 25" from Memorial Day to Labor Day, said Mr. Epstein.

The High End

"Early on, there were a few gems at 10, 11, or 12, but they get snapped up quickly," he said.

At the other end of the spectrum, Mr. Epstein has a Further Lane listing with five bedrooms, a finished basement with gym, media room, and a removable dance floor, a large pool, a tennis court, and three acres of "gorgeously landscaped grounds" that can be had for $100,000 a month for July or August.

Mr. Newbold is trying to rent a five-bedroom converted coach house with pool and guest house on Terbell Lane in East Hampton Village, overlooking Hook Pond and the ocean dunes. The asking price is $125,000 for the season.

Prices are lower in Montauk, where Mr. Keeshan said oceanfront houses are available for the season for $40,000, houses with a view of Block Island Sound can be rented for $10,000, and houses in the village are listed for $6,500 for the season.

Harbor And Haven

Some areas are doing better than others, brokers said.

"Amagansett rentals are very strong, as they always are, because it is one of the few places that affords people the ability to walk to the village and bike to the beach," said Huck Esposito of Blue Bay Realty.

Unlike in other hamlets, "the inventory has actually gone down because so many renters have turned into buyers," he said.

Sag Harbor and North Haven have also enjoyed a boom. Arlene Ball of Allan Schneider said the firm had doubled its staff in its Sag Harbor office, to 15 agents. "That's a lot of people for a little village," she said. "But more and more people are coming here because they want to get away from what's going on in the rest of the Hamptons."

Prices have risen in the area, she added. "We rented something in North Haven for $200,000 for the season," she said. "That's pretty fabulous." "Nice houses" in Sag Harbor Village have fetched up to $40,000 for the summer.

Stuck In The Middle

Mr. Newbold said he was not concerned about the high end of the market, "which is typically not done until the last minute," but he and other brokers said property owners in the middle may have trouble renting.

"Many people got wind of the fact that there was a lot of money that could be made by renting their house," said Mr. Epstein. "As a result, there is a glut of inventory."

"The properties that are the hardest to rent are the basic three-bedroom, two-bath with pool on an acre in Northwest and Springs, because there is so much competition."

Inflation is also hurting rentals. "Going back five or six years, a $25,000 summer rental was something special," said Ms. Saatchi. "Now you would have to spend $35,000 to $38,000 to get that same house."

Choking Up

"Last year was a good rental season, and people did raise their prices," agreed Mr. Newbold. "There comes a choke point when people say, 'This is a lovely house, but. . . .' "

Many of those people are either waiting around for a better deal or renting for a month only. "If your income has not gone up and the price of a house has gone up, the alternative is to spend less time here or do a share," said Ms. Saatchi.

"A lot of people, to save money, will say, 'Let's treat ourselves to a special house for a month,' " said Mr. Newbold.

The "pool of rentals gets bigger every year," Mr. Newbold remarked. Often, people who formerly rented will build their own house and "rent it the first year to try to replenish their bank account," he said.

Renters Become Buyers

Even though it generally works out costing less to rent than to buy, according to Mr. Epstein, some people "when viewing escalating rents years after year say, 'Enough of this, I'm buying.' "

With the Memorial Day weekend just a month away, brokers still are taking a wait-and-see attitude.

"I'm curious to see whether we're going to get a mad rush the next two or three weeks," said Mr. Esposito.

"We're waiting for the other shoe to drop," said Ms. Saatchi.