Gatsby and Gilded Age Fade As Recession Seizes Long Island’s East End

I went to the town of Montauk on the eastern end of Long Island over the Memorial Day weekend. It is the last town on the south shore of Long Island and follows the Hamptons towns. It has gorgeous ocean beaches, large swaths of nature reserves and hiking trails, very friendly people and some of the best fishing in the world. It truly is a wonderful hamlet and is one of my favorite places to get away. Some speculate that F. Scott Fitzgerald in The Great Gatsby, when writing about the golden age in America and Long Island during the 1920s, was writing about the Hamptons.

Since the 1990s, Montauk, like its Hamptons neighbors to the west, experienced a boom. As Wall Street soared, Montauk and the Hamptons did even better. As the national real estate boom swept Montauk and the Hamptons, even the recession in 2002 could not slow their growth. I read a real estate report that said home prices in the area went up by about 200% from 1999 through 2008. That comes out to about a 14% compound annual rate of return. Simply put, these were astonishing returns.

Over the years, I tried to go to Montauk in the off season because of the expense and the crowds in the high season. I can remember times during the high season when I would not see a ‘Vacancy’ sign on any motel. Summer rentals prices soared too. Dan Rattiner, of the famous Dan’s Papers, (A newspaper about the entire goings on in the Hamptons and Montauk) recently wrote that during the boom years there were times that he could not find parking when he went to the store. Even Fitzgerald’s Jay Gatsby would have been impressed.

This is changing though, as the recession that has taken hold of the country, is now affecting the east end. This spring, Dan Rattiner in his Dan’s Papers wrote that traffic was considerably lower. This weekend, as I walked through the town, I noticed many ‘Vacancy’, ‘For Rent’ and ‘For Sale’ signs. In some stores, I saw two-for-one specials; in some restaurants I saw advertisements for lunches under $10. The real estate market has also been affected as homes are sitting on the market for longer periods and prices drop. According to Prudential Douglas Elliman's Q1 2009 real estate east end report covering Montauk and the Hamptons, median sales prices dropped 23% and average selling prices by 36% from the prior year comparable period. The people in the town I spoke with were very friendly as usual, but their anxiety was palpable as the depths of the recession are visible. They all wanted to know when things were going to get better. It even seems like The Great Gatsby would have been humbled by this recession.

I don’t like writing about difficult times. A weak economy affects everyone. The bus boys and waiters and the fishing boats, the very friendly caretakers at the resort I stay at, the real estate agents, the local ice cream store all feel the economic vacuum. However, there are positives. Wall Street’s excesses fed the boom on Long Island’s east end. Wall Street is retrenching and the considerable overbuilding in the Hamptons and Montauk is now correcting. Eventually, equilibrium will take hold and a new more sustainable economic expansion will ensue. The golden age on the east end is over and Gatsby is nowhere to be found, but in some ways that may be for the best.