After three $60,000-plus summer-rental deals fell through on his five-bedroom house in East Hampton, artist and Elizabeth Arden hairstylist Trevor Hunter finally gave up. “My psychic told me I’d have it rented by May,” he says now. “I should have gotten a second opinion. We’re being undercut by people who are bottom-fishing.” Like many in his situation, Hunter has put his home up for sale (price: about $1 million) because he can’t find a summer tenant willing to cover his costs.
As the NASDAQ continues to sustain its bad case of the yips, Manhattanites are turning jittery themselves. The high-end summer-rental market has slowed to a crawl so pathetic that many East End homeowners, like Hunter, have decided to give up on rental income and cash out. “Summer homes usually rent for 5 to 7 percent of their market value, which will cover the mortgage plus an additional income,” explains Dayton Halstead’s Diane Saatchi. “When a house doesn’t rent … the most practical option is selling the property and reinvesting somewhere else.”
One Hamptons broker, who asked for anonymity, put her own recently purchased three-bedroom Bridgehampton house with heated pool on the market for about $900,000 – after it seemed unlikely to rent for the summer at $40,000. “A lot of people who bought in the last year or two are sitting on their homes this summer,” she says. “These same people are most likely the renters of yesteryear and invested with the intention that the house would pay for itself.”
But those owners are now finding out an ugly truth: The sales market is nearly as glutted these days as the rental market is. After all, if people won’t drop $60,000 for a summer rental, they’re not likely to spend twenty times that to buy. (In Hampton Estates, in Southampton, at least three properties have had their asking prices cut by $1 million in the past year.) Furthermore, the economy’s looking just as dicey to buyers as it is to renters. Where’s that unnamed broker putting her profits when her house does sell? “Anywhere but the stock market.”