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Jonathan Miller, the president and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm.
Real estate market analyst Jonathan Miller of appraisal firm Miller Samuel Inc. recently joined Express News Group editors on the “27Speaks” podcast to discuss the state of real estate in the Hamptons and where it is headed in 2024.
Miller, the author of the Elliman Report for Douglas Elliman, has long watched the Hamptons market as well as New York City and many luxury markets nationally. He noted trends seen nationally and on the East End specifically.
He said he had prognosticated that 2023 would be “The Year of Disappointment” because sells would not get their 2021 prices and sellers were not going to see any meaningful discounting. He said he turned out to be right, and he expects 2023 will prove to be the “bottom of the cycle” in terms of the number of transactions.
Miller is calling 2024 “The Year of Less Disappointment.” He explained that 2023 is the end of the pandemic era, and 2024 is a step forward. He attributes this to the Federal Reserve’s announcement in December 2023 that it would cut interest rates by 75 basis points in 2024, meaning that mortgage rates will drift lower.
“The stereotype of a high-end Hamptons buyer is ‘oh, they don’t care about interest rates,’ and that’s patently not true. Because while they may not need interest rates to necessarily finance their purchase, they’re looking at the financial markets, which are heavily influenced by Fed policy.”
The fact that sales volume has been lower indicates that interest rates do matter to those buyers, he noted. Interest rates across the economy influence their business lives, he said, and during 2023 there wasn’t a path forward. No one knew if the Fed would raise interest rates for another year or two. But when the Fed announced this past December that it would cut rates in 2024, and by how much, it “tightened up the story,” he explained, adding that Wall Street is also factoring in another two rate cuts in early 2025.
Expectations that rates will be lower a year from now and even lower a year after are meaningful to the housing market. “What it, I think, signals is that there’s going to be an increase in demand even though rates are still double what they were,” Miller said.
Across the nation, pricing is rising, he said, so people waiting for rates to really fall before they buy will confront prices that will go up at the same time.
The general pattern of housing markets today, whether a primary market or vacation market, suburb or urban, “the story is almost universally similar across the nation, which is that inventory is restrained.”
He attributes low inventory to the spread between the prevailing interest rates lately — about 8 percent for a 30-year mortgage — and the rates that homeowners attained during the start of the pandemic, of approximately 3 percent. Homeowners with such a low rate don’t want to trade their homes for another and a much more expensive mortgage.
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