CRAIN'Sby NATALIE SACHMECHI
June 4, 2020
Real estate agent Margaret Harrington described the New Yorkers scrambling to score what’s left of suburbia’s rentable homes as “the flood, the exodus.”
Fear led city dwellers to flock to the Hamptons to ride out the pandemic. As a result, home prices skyrocketed, and inventory declined. Now those eager to get away are sniffing around nontraditional destinations to get their fix of suburban summer life.
Harrington, who sells properties for Douglas Elliman in Westchester and Putnam counties, began seeing requests for up-river rentals in mid-March. Her office has received as many as 200 inquiries.
Eddie Shapiro, CEO of brokerage firm Nest Seekers, said he wakes up to hundreds of emails a day from people looking for summer homes. Inquiries have shot up 300% in the past two weeks, he said, with upstate demand so high that he’s building a team there to work with clients.
Some homeowners in the lower Hudson Valley had never rented out their properties to seasonal visitors in the past, but this summer is a different story, Harrington said. She went from doing one or two summer rentals as a side gig to inking four deals before June this year. At only an hour away from Manhattan, the area makes sense to city residents, she said. “They think if things change, they can still come to work a little bit," she said. "It’s the perfect place to take shelter.”
Homeowners, however, aren’t exactly giving up their houses—they want to stay in their homes away from the city as much as everyone else, she said. Unlike owners in the Hamptons, they don’t consider their homes an extra source of revenue either, she said.
To meet the insatiable demand, Harrington had to get creative—she devised makeshift rentals by reaching out to her own neighbors, asking if they’d be interested in renting. “The competitive prices made it attractive to sellers or owners who never considered themselves a landlord or Airbnb host before,” she said.
Shapiro also has turned to creating inventory by asking homeowners to consider renting.
At one of Harrington’s properties, a deal was completed within 36 hours of the renter’s inquiry. At another, she pulled off a peak summer rent price in March.
Shapiro even made a deal happen on the same day his client asked for a home. “We send them the right materials, they’ve got the budget, and within two or three hours, we’re circulating Docusigns and credit card numbers,” he said.
One of Harrington’s clients has even agreed to put up his island for rent at $40,000 a month—less than the price of a five-bedroom house in East Hampton.
After this summer, homeowners in the Hudson Valley will be much more open to renting in the future, Harrington said.
“If you buy in the Hamptons, you know you’ll rent it,” she said. “People will start thinking about this area as a destination for rentals also.”
On Long Island, renters who are priced out of the Hamptons are looking at areas like Cold Spring Harbor, Great Neck and Huntington to spend $40,000 to $50,000 a month on a home, said Shapiro. These North Shore towns were summer destinations long before the Hamptons became what they are now. Great Neck, a swanky Long Island suburb, was where F. Scott Fitzgerald spent the early 1920s writing The Great Gatsby. Its seaside properties and small-town feel were highly sought after by the ultra-rich, though today it stands as a residential community where families live year-round.
The Jersey Shore and suburbs like Short Hills are seeing a surge in demand for property as well, said Shapiro.
In New Jersey’s markets, pending sales activity is gaining traction, said Jonathan Miller, CEO of real estate consultancy Miller Samuel, with more people considering owning a second home outside of the city now that remote work is commonplace and commuting seems unnecessary.
People are buying homes at the asking price or more, said Chuck Petersheim, a builder in the Hudson Valley. “Even when people know they are overpaying, they are buying. It’s a seller’s market,” he said. Last month he sold five homes, which is incredibly high for the area, he said, amounting to a total of $3.2 million. Inquiries for homes also went up by 500%.
“It’s off the charts,” said Petersheim. Some people are even considering building new homes for themselves, he added.
“This time seems like a blending of Lehman and 9/11,” said Miller. After 9/11, the outbound migration to the suburbs lasted about three years, he recalled. “I’m not convinced this is a permanent structural change,” he said, “but what I think is permanent is the leveraging of virtual working that will lengthen the tether between where you work and where you live.”