While our outlook for the 2023 Hamptons and North Fork rental season was gloomy given the sharp rise in supply and rising demand for overseas travel, the tailwinds for the 2024 season, however disheartening the causes of such tailwinds may be, cannot be ignored.

1. Election year — The fiscal uncertainty around elections tend to persuade consumers to spend less on travel in that given year, and we don't see reason to believe 2024 will be any different. Our assumption is that people will travel closer to home, so drive time destinations like eastern Long Island and the markets north of Manhattan (“NOMA” which consists of Hudson Valley, Catskills, Litchfield and the Berkshires) will be winners.

2. Decreasing demand for overseas travel — Ongoing political instability and the growing conflict overseas will force consumers to think twice about heading over the pond. Decreasing demand for travel to Europe will result in increased domestic travel, which again, should have a positive impact on demand for Hamptons, North Fork and NOMA.

3. Slowing sales market — Largely due to lack of supply and the high interest rate environment, buyer demand has drastically fallen compared to the highs of 2020 and 2021. While most analysts believe the federal reserve will start decreasing rates in the first half of 2024, which should increase buyer confidence and subsequent demand, it takes months for changes in rates to trickle through the real estate markets. As such, we predict that consumers will choose to rent next summer with a strong wave of buyers from pent up demand entering the market to buy in late Q3/early Q4 of 2024.

4. Supply will remain high — Rental inventory continues to grow applying downward pressure on rental rates, and leaving more vacancies than most owners would care for. Properties that have thoughtful design, open floor plans and an assortment of amenities will continue to outperform. “Stale” properties will take the hardest hit in terms of rates and occupancy. Owners who do not treat vacation rentals as an evolving and maturing business will not get booked.

Overall, the tailwinds that increase demand will outweigh the negatives of growing supply, so we expect a modest rise of revenue per property compared to 2023, by about 3-5%.

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