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Jonathan Miller, the pesident and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm.
In 2023, real estate market watcher Jonathan Miller described the U.S. market as “The Year of Disappointment,” because, he said, there was no housing inventory to be had. He dubbed 2024 “The Year of Less Disappointment,” because there was a little more inventory.
Now, he’s calling 2025 “Getting Back to Zero.” That is to say, housing inventory and sales are just getting back to normal following the pandemic era.
“We’re coming out of the pandemic era, and there’s still a lot of distortion in the markets, so it takes sort of a little extra explaining to have it all make sense,” Miller said.
Miller is the president and CEO of Miller Samuel Inc., a real estate consulting and appraisal firm, and he’s the author of the Elliman Report, a series of quarterly real estate market reports from Douglas Elliman, including a Hamptons report. He recently joined The Express News Group editors on the “27Speaks” podcast to discuss the state of the Hamptons market, what influenced sales in 2024 and his outlook for the market in 2025
The Elliman Report found that in the fourth quarter of 2024, the number of Hamptons home sales was up 76.2 percent compared to the fourth quarter of 2023. It was in line with the 10-year average for fourth-quarter sales, and was the fifth time in a row that quarterly sales rose on a year-over-year basis.
Over the course of the entire year, the number of sales was up 56.6 percent, and the median sales price rose 16.7 percent to $1.75 million.
The Hamptons market was a late bloomer in 2024, with a stronger uptick in sales in the second half of the year, Miller said. He described the number of sales as still not quite normal but getting pretty close. The total inventory of Hamptons homes for sale at year’s end was 3.9 percent, reaching 1,066.
“Inventory is still lean, still a problem, and this is a national condition,” Miller said. “This is not unique to the Hamptons. This is everywhere.”
He called inventory the most important housing metric on the planet right now. “The factor that dictates whether we see more sales is if more inventory comes into the market,” he said. “Inventory is still restrained.”
One exception is the Sun Belt states. There was a tremendous amount of migration to those states and a tremendous amount of building, he said. The building was maybe a little bit overdone, and so those markets are a bit softer, he explained.
The Hamptons hasn’t been softening.
“Normally, what happens in a booming market is that there’s a negative external event, like a spike in mortgage rates, and sales slow. And then inventory surges, and then prices drop,” Miller said. “But, generally, prices are kind of moving sideways.”
An underlying reason why that’s the case in the Hamptons is low inventory. Miller pointed out that housing inventory is 44 percent lower now than it has been in the fourth quarter of 2019 — the last quarter before the pandemic arrived in New York. “That’s where the distortion comes in,” he said. “The inventory, it rose 3.9 percent, but it really needs to rise about 40 or 50 percent to get back to normal levels.”
Even as inventory ticks up, the mix of price points is not in line with what it had been prior to the pandemic. The supply is skewed to the higher end. “The number of sales in the fourth quarter that were above $5 million was the highest in history, and they were up 48 percent year over year,” Miller noted. “And then the number of sales above $10 million was the highest in history, and it’s up 24 percent year over year.”
He pointed out that the higher the home price is, the more likely it is that the buyers are paying in cash. It’s also more likely that they have the ability to purchase at a high interest rate and gamble that they can refinance at a lower rate in two or three years.
Mortgage rates now stand at nearly 7 percent, which is near a two-decade high. Rates are just about where they were a year ago despite the Federal Reserve cutting the federal funds rate by 100 basis points in 2024. “Rates will probably be a little lower in the next couple of years, but, you know, that’s your gamble if you buy now,” Miller said.
As recently as last summer, interest rates had been forecast to come down faster, but in light of continued job growth and persistent inflation, the Fed slowed down the pace of cuts. “There was an expectation that there were going to be six cuts in 2025,” he said, but now only two are expected, and not until the second half of 2025.
“Housing prices a year from now, two years from now, are going to be higher than they are today, even with rates at 7 percent,” Miller said, adding that of about 15 national economic forecasts, all but one anticipate a 3 to 5 percent housing price increase in 2025.
He said inventory was “removed from the planet” during the pandemic because rates were too low for too long. “That’s the distortion,” he said. “That’s the inventory problem, and the only way that a lot more inventory will come on is if rates plummet, and no one’s expecting that.”
With unemployment at 4.1 percent and wages still rising, the economy is still strong in the context of employment, he said. “So this is not the moment to expect a rate cut.”
Of course, much like how COVID came on suddenly in 2020 and upended the market quickly and unexpectedly, things could turn on a dime. “Something could happen and things could change quickly, both higher or lower,” Miller said. “We just don’t know. And when there’s that uncertainty, the lenders are going to err on the side of being conservative when it comes to rates. They don’t want to be sort of caught holding the bag.
Listen to Jonathan Miller on “27Speaks” at 27east.com/27Speaks. Subscribe to “27Speaks” on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts.
