It’s time for my NYC real estate review for 2025! Let’s take a look at whether or not my predictions for the year panned out.

Prediction: Stubborn Interest Rates with Some Modest Relief

Reality: This prediction came true but it was definitely quite touch and go at some points throughout the year. The year started off looking quite promising. But the tariff policy of the current administration really rattled the markets during the spring. And we saw these nerves play out in the form of higher interest rates. However, after some softening in policy, things calmed down. And then interest rates finally moved downward at the end of summer and into the fall. But unfortunately, the higher interest rates earlier in the year knocked the wind out of the sails of the spring sales market which was more lackluster than hoped. 

Prediction: More Inventory – Finally

Reality: This one didn’t really pan out for either borough due to higher interest rates continuing to exert a “lock in” effect on sellers. Inventory levels in Manhattan stayed roughly on par with what we saw in 2024. And while inventory for smaller apartments did actually improve in Brooklyn, larger apartments in the borough saw inventory declines. In fact, for most of the year, listing levels boroughwide lagged way behind what we typically expect based on 10 year averages. 

Prediction: Prices Come Out of the Quagmire

Reality: We had a tale of two boroughs here. Prices remained rather flat in Manhattan, capping off a “not too bad” but not really a “great” year for sales in the borough. However, Brooklyn actually did see some improvement, albeit modestly. The differences in price growth between the two boroughs were especially evident in my home ownership cost series (for example see the price trend lines for 2 bedroom apartments). In general, however, the shock of higher interest rates in the spring acted as a lid on price growth in both boroughs. 

Prediction: A Tale of Two Rental Markets

Reality: Manhattan and Brooklyn might as well have been two different cities. The two markets were wildly divergent. Manhattan didn’t see a typical rental market. It saw a much worse one, exacerbated by persistently low levels of inventory which then translated to ever climbing rental prices. The passage of the FARE Act likely made things worse. But, in my opinion, the lack of new development and low lease turnover were the main culprits behind rising prices. 

Brooklyn, on the other hand, saw a more normal rental market. It was still very competitive, especially in highly desirable neighborhoods. But price increases were much more modest, and renters had more choices thanks to an onslaught of new developments, especially in Gowanus, Fort Greene and Downtown Brooklyn. 

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What does the future hold for 2025 in NYC real estate? Stay tuned for my upcoming post for my predictions for the new year!