Workers Continue to Get Priced Out of the Hamptons

For decades, residents and seasonal visitors to the Hamptons and other towns on the East End of Long Island have braced for spending summer mornings and evenings in the “trade parade,” the congested procession of contractors, hospital staff and other workers who commute to the East End to work every day.

Priced out of the area, many workers have long lived up-island in less expensive locales like Manorville and Mastic-Shirley, forced to commute for hours each day.

But the parade is thinning, business owners warned. Fewer and fewer workers are willing to endure wall-to-wall traffic for low-wage jobs, punctuating the longtime dilemma that the workers who keep the North and South Forks running cannot afford to live there.

“I don’t throw the word crisis around very easily, but it’s at that point,” said Fred Thiele Jr., a state assemblyman whose district includes Southampton. He said a staff member was forced to vacate the house she rented in Sag Harbor when the landlord sold it to capitalize on soaring home prices, part of a wave of sales that turned yearlong rentals into seasonal vacation homes. The staffer moved in with her boyfriend, he said, “but for a lot of people in that situation, they didn’t have options.”

Complaints about the lack of affordability are not new, but the pandemic brought on a panic and changes in the rhythm of the summer season. Many restaurants now close one or two days a week, even in the summer, without enough staff to work in them, business owners say. “Who’s going to drive from Shirley and sit in that traffic to clean hotel rooms?” said Jay Schneiderman, the town supervisor of Southampton and the owner of a hotel in Montauk.

Residents are once again debating proposed solutions, including where to build high-density housing developments and how to best use funds that are designated for affordable housing measures.

The Hamptons had pockets of affordability, such as the Springs, a densely wooded neighborhood along Three Mile Harbor Road in East Hampton, but the mad dash to the suburbs during the pandemic pushed prices out of reach for people with lower incomes.

Even real estate agents making an average $100,000 a year can’t afford the market, said Ben Dixon, a salesperson with Douglas Elliman in both New York City and the Hamptons.

The average sales price on the South Fork, which includes the Towns of East Hampton and Southampton, was $3.222 million in the first quarter of 2023, a 73 percent increase from $1.86 million in 2019, according to Corcoran data.

On the North Fork, which includes the Towns of Southold and Shelter Island, the average price was $1.188 million in the first quarter of 2023, up 64 percent from $723,000 in 2019.

The towns offer some subsidized rental and sales units, including 344 in Southampton and 818 in East Hampton. The wait-lists of applicants far exceed the demand: 1,334 applicants in Southampton and 3,107 applicants in East Hampton, as of last month.

In November, the four Towns on the North and South Forks — Southampton, East Hampton, Southold and Shelter Island — passed a 0.5 percent real estate transfer tax to build up a Community Housing Fund. The tax applies to the sale of all properties, with the first $400,000 exempt for those sold for less than $2 million. Mr. Thiele’s office expects the new tax to raise $25 million in 2024, its first full year of implementation, and $600 million by the time it’s up for renewal in 2050.

Local governments can use the fund for initiatives, like down payment assistance for home buyers, public-private construction projects and the creation of accessory dwelling units on existing home properties. If the community housing fund raises $10 million annually, it would equate to 66 new units each year, Mr. Schneiderman said.

Residents are skeptical of affordable housing; they believe that the preservation of the Hamptons’ lush environment is a priority, too, said Bob DeLuca, president of the land conservation organization Group for the East End.

“You should be concerned about what happens in your backyard. Why wouldn’t you be?” he said.

Land in the Hamptons is guarded by the Peconic Bay Tax, a real estate transfer tax enacted in 1998 that has generated more than $1 billion since 2000 for a Community Preservation Fund.

It has been so successful that there is little land left for development. About 68 percent of Montauk is preserved, said Scott Wilson, director of land acquisition and management for the Town of East Hampton.

While officials navigate policies and politics, local business owners are determining where their employees will live in the meantime.

Jesse Matsuoka, 37, who co-owns four restaurants, including Sen and K Pasa in Sag Harbor, now has six “staff houses”: a single-family and a multifamily home in Sag Harbor, three apartments above Sen, his parents’ guest bedrooms and a spare room in his own house.

His wife, Jessica Matsuoka, moonlights as their property manager.

Still, Mr. Matsuoka needs housing for more than 100 seasonal employees and isn’t sure that his restaurants will operate at full capacity this summer.

“They’re trying to sell this lifestyle to others to live here, but they’ve pushed out the working class, so how are businesses supposed to operate?” he asked.