Vacation rentals still hot in the Hamptons

As waterfront homeowners in western Long Island ponder how high to raise their homes to protect against storm surges, in the Hamptons the question is: How high will summer rents go?

At the very top are places like The Sandcastle, a 12-bedroom, 26,500-square-foot mansion in Bridgehampton. It has a baseball diamond, sunken tennis court, bowling alley, gym and spa, indoor mini basketball court, outdoor pool, three kitchens, six fireplaces, a rock-climbing wall and staff quarters for those who keep the 11.5-acre property in shape. If that's not enough room, there's also a guesthouse."It would be hard to imagine another bell or whistle,"said Gene Stilwell, a broker at Town & Country Real Estate in East Hampton.

A two-week rental will put you back $550,000 -- which works out to be $27.28 per minute.

Sandy's fury caused little damage to the Hamptons. If anything, it may have modestly boosted demand for East End rentals, because the storm destroyed summer housing elsewhere.

Real estate brokers say the prices are holding up this year, and actual rental prices are coming closer to asking prices than they have in the past.

"At our firm most of our leases that we've negotiated have been around 95 percent of full asking price," said James Young, a principal at Rosehip Partners, a real estate brokerage firm in East Hampton.

The strong Hamptons rental market is a reminder that the wealthy are doing just fine. A study last month by the Pew Research Center showed that from 2009 to 2011 net worth of the richest 7 percent in the nation rose by an estimated 28 percent because of gains in the stock market while it fell by 4 percent for the rest of the population.

The study's findings mirror work done by Edward Wolff, an economics professor at New York University. "Wealth in the middle-class tends to depend mainly on housing prices and the wealth of the rich depends mainly on stock prices," Wolff said.

The wealthy's housing prices "fell less than that of the middle class during the Great Recession and they recovered more because upper end house prices are mainly dependent on how wealthy the very rich are," he said. "As the wealth of the rich recover . . . the value of houses owned by the rich also went up, so housing prices on the high end have also recovered more than that of the middle class."

On Long Island, in fact, the median price of the most expensive East End homes, after falling during the financial crisis, have eclipsed their previous peak of $5 million in 2008, reaching $5.2 million in 2012, according to data from appraisal company Miller Samuel Inc.

By contrast, the median sales price for houses excluding the East End and North Fork, which peaked in 2006 at $440,000, were still at $350,000 last year, according to Miller Samuel. (In recent months median prices in the rest of Long Island have generally shown modest, single-digit year over year percentage growth, according to Multiple Listing Service of Long Island Inc.)

Hamptons real estate prices have an impact on Long Islanders who can't afford them. Some of the biggest property taxpayers in the Hamptons are residential, which is somewhat unusual in most towns. Typically the biggest tax bills in a municipality go to commercial endeavors with a lot of land -- think shopping malls or office parks.

In East Hampton, seven of the top 10 property taxpayers are for residential property, according to municipal bond documents prepared by the town. On a list of nine of Southampton's largest taxable properties, five are residences -- the biggest being billionaire investor Ira Rennert's estate with an assessed valuation of $248 million, according to the town's bond documents.

Not all properties in the Hamptons are as stratospheric. Homes without a pool rent as low as $8,000 for the month of July and $10,000 for August, said Danielle Becker Wilson, a sales agent at Halstead Property -- and are usually rented by President's Day in February.

Many of those still available for rent are on the high end.

"Now that we're getting closer to Memorial Day, we get the last-minute people," said Becker Wilson. "They're last-minute but they'll pay whatever to be out here."

Last year, the Sandcastle, which is about a five-minute drive from the beach, was rented by entertainers Jay-Z and Beyoncé, broker Stilwell confirmed. Owner Joe Farrell, who builds luxury homes in the Hamptons, offers the property for sale for $43 million.

Beachfront property also commands high prices. A mansion on Meadow Lane in Southampton designed by architect Norman Jaffe, who designed dozens of contemporary homes in the Hamptons from the 1960s until his death in 1993, offers views of the Atlantic and Shinnecock Bay, and rents for $600,000 for the Memorial Day to Labor Day season. That will get you a 6,500-square-foot, seven-bedroom house with a pool, tennis court and a personal gangway to the beach.

Although renters aren't worried about flooding like owners and potential owners are, Sotheby's International Realty broker Harald Grant said the house wasn't in danger of erosion. "It's very safe -- you've got a nice big dune in front of you," he said.

Broker Stilwell said the Hamptons "dodged a bullet" when Sandy bore its full force on the Jersey Shore and Western Long Island.

Sandy did, however, cause extensive damage on Fire Island. Brokers on Fire Island say that some homes won't be repaired in time for the summer season. And some of those renters have been looking at the Hamptons, said Judi Desiderio, chief executive of Town & Country Real Estate: "This is the first time that I've seen that somebody comes to us and says, 'normally I vacation on Fire Island but this year I'm going to come to the Hamptons because my house is no longer there.' "