Guest Spot: Vacation Rental Inventory Down, Revenue Up, Amid COVID - 27 East

Real Estate News

Real Estate News / 1729135

Guest Spot: Vacation Rental Inventory Down, Revenue Up, Amid COVID

icon 1 Photo
Bryan Fedner

Bryan Fedner

Bryan Fedner on Oct 13, 2020

The Hamptons rental market in 2020 was unlike any other year in recent memory.

The rental season was defined by major changes in supply and demand dynamics as a direct result of the COVID-19 pandemic, along with new state-wide laws affecting landlords’ ability to collect rent or evict tenants in the event of a lease default. These factors resulted in decreased rental inventory and increased tenant demand, driving occupancy and rental rates to all-time highs.

The rental season got an early start in mid-March, as both renters and owners fled urban areas such as New York City in search of an escape from the pandemonium that ensued as COVID-19 spread throughout the tri-state area.

Many early bookings were for indefinite periods of time, as renters requested “right of first refusal,” giving them the option to extend their reservation in the event that another offer would displace them from their accommodations.

In March, Governor Andrew Cuomo ordered a stay on evictions, which led to owner concerns over “holdover tenants” — a tenant who refuses to vacate a rental property after the end of the term. At the same time, new laws instituted under the New York State Housing Stability and Tenant Protection Act, signed by Governor Cuomo in June 2019, put limitations on the amount of rent that owners could collect upfront, which — for a very seasonal rental market like the Hamptons — created fears that rent collection would become a challenge.

As a direct result of these tenant-favorable protections and owners using their homes as their own safe havens, almost a quarter of the rental inventory was removed from the market. The number of Hamptons properties available for rent in 2020 on online channels declined by 23 percent year-over-year to 4,173.

Many owners also decided to put their homes on the market for sale. This decision was driven by the sudden spike in demand for single-family homes in vacation destinations, particularly those that are shorter drive times from major metropolitan hubs. The low-interest-rate environment, coupled with rising rental prices, fueled the demand for outright ownership.

These substantial supply and demand shifts, in addition to broad-reaching travel restrictions, created an extremely favorable environment for owners who were interested in renting.

Overall booking trends this year reflected fewer bookings, in volume, for longer durations of stay and higher nightly rates. From March to September, available inventory decreased 23 percent while total rental dollar value only decreased 16 percent, supporting a 4 percent increase in average nightly rates, to $971 per night, compared to the same time frame in 2019.

The average rental income per property grew by 9 percent, to $39,392 per property, and the average length of stay increased by 27 percent year-over-year.

More rentals of two weeks or longer were made in 2020 than any year prior, which signifies the increasing trust renters have with reserving properties via online channels — often sight unseen. This is a trend that is expected to continue going forward.

As we look ahead into the fall and winter months, we are seeing trends consistent with peak season — lower total booking volume with longer average duration of stays in each month. Similarly, average nightly rates during the off-season in 2020 are higher than they were last year.

As new developments continue to unfold with respect to COVID-19 and the uncertainty surrounding the upcoming election, making specific predictions for 2021 at this juncture is premature. However, should there be a spike in the number of COVID cases in the denser submarkets within the tri-state area, we expect renter demand to rise. We also predict that more owners will choose a hybrid-approach where they decide to rent their home and use it when it is not being rented. Owners who choose this strategy will likely be successful in accomplishing their rental goals.

Bryan Fedner is the co-founder and managing partner of StayMarquis, a vacation rental management company serving the South Fork. For more information, visit staymarquis.com

You May Also Like:

Ezekills Hollow Sale For $14.5 Million Points To Growing Demand For Luxury Properties In Sag Harbor Area

The sale of a waterfront home on North Haven recently closed for $14.5 million, the ... 30 Nov 2020 by Brendan J. OReilly

First Neck Lane Estate Sells For $11.5 Million

A Southampton Village estate section home at 252 First Neck Lane recently sold for $11.5 ... by Staff Writer

Further Lane Estate Fetches $7.5 Million

A 2-estate Amagansett estate on storied Further Lane recently sold for $7.5 million, according to The Real Estate Report Inc. At 386 Further Lane, the property boasts a 9,000-square-foot stucco manor built in 2001. According to a Corcoran listing for the estate, the residence’s main floor has a dramatic great room, a children’s wing with two suites and a large play area, a guest suite and a state-of-the-art kitchen with an adjoining living room. Upstairs, a master wing offers a “sumptuous bathroom, an office, a sitting room and a large outdoor terrace,” and an additional bedroom completes the second story. ... 23 Nov 2020 by Staff Writer

Wickapogue Road Estate Sells For $8 Million

A Southampton Village estate dubbed “The Beachmont” sold and closed last month for $8 million, ... by Staff Writer

Wilkes Lane Estate Sells For $7 Million With Plans For Redevelopment

A 1.8-acre Sagaponack estate south of Montauk Highway that was listed for $8.5 million has ... 19 Nov 2020 by Staff Writer

Sagaponack Estate Fetches $9 Million

A Sagaponack estate overlooking 14 acres of farmland recently changed hands for $9 million, according ... 16 Nov 2020 by Staff Writer

Record Executive Buys Southampton Estate For $18 Million

A modern Southampton Village estate by builder George Vickers Jr. Enterprises recently sold for $18.1 ... by Staff Writer

Bayfront Property In North Haven Sells For $11.5 Million

A North Haven home on 4.4 acres of bayfront property recently sold for $11.5 million ... 12 Nov 2020 by Staff Writer

Kevin Sorbo Sells Bridgehampton Residence For $8 Million

“Hercules: The Legendary Journeys” star Kevin Sorbo and his wife, Sam Sorbo, an actress and ... by Staff Writer

Twenty-Five Condos Proposed On Site Of Dockers Restaurant

The owners of the 8.6-acre property in East Quogue where Dockers Waterside Marina & Restaurant ... 9 Nov 2020 by Brendan J. OReilly
logo

Welcome to our new website!

To see what’s new, click “Start the Tour” to take a tour.

We welcome your feedback. Please click the
“contact/advertise” link in the menu bar to email us.

Start the Tour
Landscape view not supported