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As The Wealthy Return To Cities, Beach Resort Towns Are Left With A Housing Mess

In 2020, the pandemic precipitated a mass migration event of well-heeled New Yorkers to the swanky beach towns of the Hamptons on Long Island.

But the reality of in-person schooling and return-to-office mandates means the city expats of 2020 and 2021 are heading back to their normal lives this year, leaving behind a slew of problems — like a punishing labor shortage and exacerbated housing crisis — in their wake.

Montauk Lighthouse

Without homes that are both available and affordable for a wide swath of the working population, locals who spoke to Bisnow in recent weeks said they are concerned that family businesses and public services in the small communities will be completely eroded.

“Ultimately, something will break,” East Hampton Director of Housing Tom Ruhle told Bisnow. “Everyone this summer has been complaining of long lines, places not open as frequently as they have been in the past because they simply don't have the staff and even more traffic from people commuting here from afar."

The frenzied rush among city dwellers to buy homes in suburbs and vacation spots drove down inventory. A push to build more affordable housing, as well as legislative measures to help fix the problem, are gathering steam, Ruhle said, adding that wealthy property owners will feel the impact eventually if they ignore the issue.

"We're getting a lot of illegal housing where people are just cramming in to find places to live,” he said.

Business owners told Bisnow they have struggled to hire, and the top reason is employees can't find an affordable place to live.

“If you don't own it, or you don't shove 30 people into a house for the staff … No one can live here,” said Kristin Sheeler, who owns a trio of clothing shops in Long Island's posh beach towns.

Sales of homes in the Hamptons have fallen sharply, down 37% from a year ago, according to data from housing appraisal firm Miller Samuel. While sales had been soft in the years leading up to the pandemic, the rush to buy soaked up so much inventory it is now two-thirds below where it was before the pandemic.

The lack of houses on the market has helped drive prices up: In the second quarter, the average sales price hit $2.9M, a 20% year-over-year increase.

“Property owners in the city became buyers out east because of the flexibility that remote [work] gave — at least on a temporary basis,” Miller Samuel CEO Jonathan Miller said. “Inventory has been so low over the last year that it was restraining potential sales activity. It was a big challenge in the real estate community in the Hamptons — there's very limited product to sell.”

The beach in Montauk

Douglas Elliman broker Michael Daly has lived full time in the Hamptons since the 1990s, and in the years he has been selling and renting homes, he has become increasingly concerned about the lack of housing to serve people who can't pay summer mansion prices.

The problem has become so bad he said some schools aren't teaching certain subjects because they can't find teachers, and the teachers who are there are fatigued from driving long distances each day.

The volunteer fire departments are dwindling, he said, and the communities' heritage of fishing and agriculture is disappearing.

In 2017, he attended an affordable housing advocacy workshop on Cape Cod, which he said has a similar set of challenges to that of the Hamptons. As a result, he founded East End YIMBY, a community organization aimed at pushing for affordable housing solutions.

“All of our communities here have very robust public input sections at all of their meetings, and who comes to get public input?” he said. "You know, the same NIMBYs who just want to basically protect their way of life."

He started building up a group of people that would attend community meetings and push their agenda for affordable housing.

Right now, he said, the group's focus is the upcoming Community Housing Referendum, which would allow towns to establish community housing funds. The funds would be financed by adding a half-percent to the existing real estate transfer fee, creating a one-time fee paid by buyers. First-time homeowners would be exempt.

Those funds would be used for new housing or renovations, as well as providing funds for first-time home purchasers and to provide assistance for rent-burdened families. The referendum will be on the ballot for East Hampton, Shelter Island, Southampton, and Southold towns this November, Daly said.

“By the time the pandemic hit, everybody started realizing that we’re sliding down a slippery slope. A lot more people have jumped on board and started attending town and village meetings and talking about the importance of having community housing for local residents, young people, seniors and essential workers," he said. "Otherwise, we're looking at the 'Disneyfication' of the East End, where we're just a park that all the employees drive into in the morning, do their jobs and drive out at night.”

Horace Barrow, a broker at Nest Seekers in Westhampton Beach, agreed that locals' views on the need for affordable housing are shifting.

“I found that there are more people coming to these functions, you know, like the traffic is higher. And I think people are understanding even further the need for it,” he said. “Some people's mindsets are just going to be their mindsets — sometimes it’s not something you can change.”

Nibi MTK

It is certainly a challenge for businesses like Victoria Batha Cuomo’s, who opened a Pilates studio in Montauk in the summer of 2020. She told Bisnow in September that the predictions of a year-round population provided an opportunity that didn't exist before. 

Her local business is still going strong, she said this week, adding that expanding from the city has opened her up to a whole new set of clientele. Her studio won't stay open through the winter, however.

“The whole thing has been a pleasant surprise,” she said. "The demand is there. I am fully booked almost every day and I have a waitlist often as well."

But her ability to add staff and grow the business in Montauk has been stymied by the lack of housing, she said, particularly as she can only hire someone specifically trained to instruct classical Pilates.

“I can’t offer anybody a place to live, and that's the big drawback for operating business out here, because housing it's just so expensive,” Batha Cuomo said. “In order for me to potentially want to hire somebody, I would have to make sure that they have some arrangement for where they would stay when they're here. Unfortunately, where I rent is just not big enough to offer that to somebody who works for me as well.”

Scores of city businesses tried to make the most of the swelling population out east in the worst of the pandemic.

Greenwich Village bar Dante started sending bottled cocktails to the Hamptons in the summer of 2020. The owner of Flatiron’s Hill Country Barbecue Market turned his East Hamptons home into a “logistics center” and allowed people to pick up food from there. West Chelsea private school Avenues: the World School formed an East Hampton campus.

“The town is bursting at the seams,” one person in the Hamptons complained to Vanity Fair September 2020. “Nobody is fucking leaving."

They are now, Sheeler said. She owns Nibi MTK, a clothing store with locations in Montauk, Bridgehampton and Westhampton Beach.

“I don't think you'd ever understand what an East Coast beach winter is like,” she said. “The sun goes down at 4 p.m. … It’s cold, it’s wet, and there’s no one here."

Finding workers to run her stores has proven almost impossible this year. She said she has been forced to rely heavily on college students who have a tendency to drop out of work at a moment’s notice. This year is way worse than anything she’s experienced, she said, and she plans to close Nibi MTK's Montauk location from November through April.

“We're all experiencing it, every owner is doing what they can to get through — we're all exhausted,” she said. “No one talks to anybody by mid-August.”