Real estate consultant and Miller Samuel Inc. CEO Jonathan Miller called 2023 “The Year of Disappointment” (due to a lack of housing inventory) and 2024 “The Year of Less Disappointment” for the U.S. real estate market. According to Miller, 2025 is the “Year of Getting Back to Zero,” because the real estate market is returning to its pre-pandemic baseline for housing inventory and sales.
Miller shares these reflections in the Elliman Report, a series of quarterly market reports produced by Douglas Elliman Real Estate and authored by Miller. One set of these quarterly reports focuses on the Hamptons, and Miller shared some of the key findings during a recent edition of the 27Speaks podcast.
A (Slowly) Rebounding Market
The Elliman Report revealed that in Q4 2024, the number of home sales in the Hamptons was up 76.2 percent compared to Q4 2023, marking the fifth consecutive quarter that sales had risen year-over-year. The median sales price for a home in the Hamptons rose 16.7 percent throughout 2024, reaching $1.75 million. At the close of 2024, 1,066 homes were for sale in the Hamptons, representing an inventory increase of 3.9 percent.
This was an improvement over the previous year but still 44 percent lower than in Q4 2019, right before the pandemic. “Inventory is still lean, still a problem, and this is a national condition,” Miller explained. “This is not unique to the Hamptons. This is everywhere.” Miller elaborated that inventory is the most crucial metric to watch in today’s housing market; lack of inventory dictates lower sales. “The inventory, it rose 3.9 percent, but it really needs to rise about 40 or 50 percent to get back to normal levels.”
The Rich Are Buying, The Middle Class Less So
Another finding from the Elliman Report is that home prices in the Hamptons are currently skewed toward the high end, with the highest number of fourth-quarter sales above $5 million in history. Sales in this category were also up 48 percent year-over-year. Miller added, “The number of sales above $10 million was the highest in history, and they’re up 24 percent year-over-year.”
One factor that may be affecting sales of homes in lower price brackets is the historically high mortgage rates, currently at 7 percent—almost the highest rate in two decades. Mortgage rates have remained nearly unchanged since last year, after the Federal Reserve slowed its cuts to the federal funds rate due to ongoing inflation and steady job growth.
“Rates will probably be a little lower in the next couple of years,” Miller suggested, “but, you know, that’s your gamble if you buy now.” He suggests that high sales of higher-priced homes simply indicate that those buyers are likely paying in cash and have the ability to buy a home at a higher rate, taking the chance that they will be able to refinance at a lower rate in another few years.
Outlook for 2025 and Later
“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 cautioned. He noted that out of 15 economic forecasts for the U.S. real estate market, all but one project a 3 to 5 percent increase in housing prices for 2025. Miller pointed to the sharp dip in inventory during the pandemic when, he said, inventory was “removed from the planet” as an explanation for the higher prices. “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.” Federal rate cuts are not expected because wages are still going up and unemployment is holding steady at 4.1 percent.
That said, Miller believes the unpredictable could still occur. No housing or real estate expert anticipated that COVID-19 would disrupt the market early in 2020, and something big could well change tomorrow—with either positive or negative effects on rates, inventory, and housing prices.
