Watching rentals for signs of life

Are we officially into Recovery yet? The answer may come as quickly as next weekend.

That’s President’s Day weekend, which is a holy day of another sort on the East End: the traditional kickoff of the summer rental season. If you’re thirsty for economic tea leaves, you could do worse than reading these.

“President’s Day weekend is when people really start looking, but last year it didn’t really happen,” Karli Kittine of Corcoran Group Real Estate in Southampton told me this week. “It started much later.”

That’s an indicator. In the wintry grip of the financial crisis, summer people were nervous, like skittish antelopes. Not only did they come late to the watering hole, they came for briefer sips.

“It was still a decent season but [activity started] closer to Memorial Day,” Kittine said. Also, there tended to be more short-term rentals and fewer for the full season.

There’s another force at work and it has to do with plumage. “I think people don’t want to be showy” in this bleak climate, Kittine said, (noting with a laugh that, for herself, that’s not an issue). “Instead of $150,000 for the full season, they might do $50,000 for August through Labor Day. But be a little more conscious about it.”

Laura Holson mentioned that trend in her recent New York Times column.

“Now,” she wrote, “after a year of self-imposed austerity and in what is shaping up as a spectacular bonus season, the Wall Street crowd is shaking off what one luxury retailer called its ‘frugal fatigue.’ Unlike earlier spending sprees, however, the consumption will be a lot less conspicuous.”

That’s widely expected to spark a boost in sales and rentals out east, but an interesting spin might be a continued move toward the North Fork, where lots more living can be had if renters are willing to make do with a little less glam.

Back in the Hamptons, as indicators go, the high-end rental market isn’t much of a bellwether, according to Judi Desiderio, president and chief executive of Town and Country Real Estate. Speaking of the rarefied realm of oceanfront rentals, she said, “You can count them on one hand, so they’re going to go.” More telling is activity in lower price ranges “If you have a four- or five-bedroom north of the highway in the woods with a pool, unless it’s priced right and dressed beautifully, it might not get rented.”

Thus, it’s still a buyers’ market, Desiderio said, and canny renters can use that to their advantage. They know that many owners “would prefer to have a real person in [a house] than leave it vacant,” she said, “so they can negotiate a couple weeks on either side [of a short-term rental] for not much money.”

Desiderio did a study on renters and buyers a few years ago, finding that about 70 percent come from New York City and as many as 25 percent from abroad, mainly Europe. In years past that foreign infusion seemed the least predictable, but now it’s the Gotham escapees who are getting hard to prejudge, as they deal with so many influences, including, of course, post-traumatic stress from the market plunge. There are all the Wall Streeters who lost their jobs and bonuses. More subtle will be the behavior of those financiers who didn’t lose their jobs and bonuses but are wrestling with the fear of seeming ostentatious. The coming weekend “will be a good indicator of what’s going on the city,” Desiderio said.

If the recovery is, in fact, afoot, it’s likely that a lot of the rental picture will be in focus by the end of President’s Day weekend or at least the weekend after, when “close to 50 percent” of the deals traditionally have been done, according to Desiderio. Does she anticipate fireworks?

“I’ve been monotoring the market for close to 30 years,” she said. “Truth be told, a trend started in August. Momentum is building. It’s a good market, not great. Nowhere near the top or bottom.”

So we’re stuck in limbo?

“No, it’s healthy,” she said. “It’s still a buyers’ market, but we’re not seeing the market come down. A floor’s been established and it’s holding strong.”


Long Island Business News / February 4, 2010