The island was plagued with erosion, and by 1923 four of the original 7 acres (2.8 ha) had disappeared.

In that year the light was automated and the entire island of Little Watts, including the keeper's house, was sold to a Baltimore insurance executive, save a 30-foot (9.1 m) diameter plot centered on the tower.

After the light was automated, Charles Hardenberg, a Princeton-educated lawyer from a respected Jersey City, New Jersey family moved into the abandoned keeper's house after his brother, a physician, bought Little Watts.

Hardenberg had moved to Watts Island in the middle of the Chesapeake Bay in 1910 on a bet he couldn’t stay there alone for ten years, but lived as a hermit on the islands until his death nearly 30 years later in 1937.

The spot is now charted as "Watts Island Rocks" and is marked only with a lighted buoy.