It’s time to dive into my NYC real estate market predictions for 2025! Here’s what I think will be in store for the new year.

Stubborn Interest Rates with Some Modest Relief

Interest rates are likely to remain elevated in the first months of 2025 for a couple of reasons. 

First, the Fed is projected to only cut rates twice in 2025. The reason? Worries about inflation. Although it’s improving, inflation is still not at the Fed’s target of 2%. 

Second (and connected to this), there’s concerns over the incoming administration’s proposed tariffs and deportation policies. Either of these could send inflation way higher. 

All that being said, once there’s more clarity on federal policies and the direction on inflation, mortgage rates may finally taper down. It will probably be very slow and quite modest. But it’ll be a welcome change for both buyers and sellers. 

More Inventory – Finally

This prediction might be surprising given my previous one about interest rates. But hear me out. 

Interest rates have been elevated for 2 years now. And both buyers and sellers have adjusted their expectations to this new reality. While some may decide to continue to play the waiting game, others will be done waiting. 

Why? Because life will demand it. Folks will want to move for various reasons – to upsize, downsize or take advantage of new job opportunities. Or they may simply want to live elsewhere. 

Additionally, some sellers may be encouraged to list if my next prediction comes true. 

Prices Come Out of the Quagmire

Price growth in both Manhattan and Brooklyn stagnated in 2024 due to disappointing movement with mortgage interest rates. But if mortgage rates start off the year below 7%, then activity may be more robust than anticipated. And this may tempt some sellers to put their places on the market. 

You’d think this would lead to price declines – and it might! At least in the short term. But lower interest rates also generally tempt more buyers to get into the market. And overall inventory in both boroughs was behind typical 5 year averages to close out the year. Even with more listings, it may not be enough to make up the deficit. 

So higher demand plus a low level of listings could equal prices marching a bit higher. 

A Tale of Two Rental Markets 

Things may end up looking quite different for Manhattan and Brooklyn in 2025 as far as the rental market goes. 

For Manhattan renters, you’re likely to see a typical rental market. Tight vacancy, some increases in rents but generally bouncing around current highs. And unfortunately, there’s not much in the new development pipeline to offset this trend. 

Brooklyn is a different story, however. 

Quite a bit of new inventory will be poised to hit the market in 2025 throughout the borough, especially in Gowanus and Downtown Brooklyn. Much of it will be luxury and may pull up average prices. But the new inventory may still exert downward pressure on listings in surrounding areas. And this could have ripple effects around the borough. 

The deals and opportunities won’t be evenly dispersed. And many may not come until later in the year. But they’ll be there. 

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