Happy New Year! I hope everyone had a chance to relax and recharge during the holidays. As we step into 2025, let’s dive straight into what experts and industry colleagues are predicting for the year ahead. For starters, Bank of America recently forecasted a 2.0% increase in U.S. home prices this year, reflecting a slower growth rate compared to last year. This marks a decline from the 4.7% increase they projected back in June.
Closer to home here in New York, the unexpected surge in activity late last year has many brokers feeling optimistic about what 2025 could bring. Despite the challenges of high interest rates, inflation, and low inventory, the uptick in buyer interest signals potential momentum. As Brown Harris Stevens CEO Bess Freedman explains, “Sellers are hesitant to list because they’re locked into low interest rates, while buyers have been patiently waiting for the right moment.” This renewed activity, coupled with a sense of cautious optimism among industry professionals, suggests that even modest improvements in market conditions could set a brighter tone for the year ahead.
John Walkup, co-founder of UrbanDigs, anticipates modest price increases in Manhattan and Brooklyn throughout 2025, driven by rising buyer activity and limited inventory. He expects more buyers to adjust to the “new normal” of mortgage rates and re-enter the market, with competition remaining strong—especially if rates see a slight dip. This combination of pent-up demand and constrained supply could continue to push prices upward in the year ahead.
Sellers are expected to retain an advantage in 2025 due to limited inventory, which continues to support prices. However, resellers of co-ops and condos may face challenges competing with the appeal of new developments, which are capturing a growing share of the market. Jonathan Miller, CEO of Miller Samuel, notes that housing prices are unlikely to decline, as supply constraints persist. While existing inventory remains below normal levels, new construction—typically commanding higher prices—is expected to see notable growth, posing additional hurdles for lower-income buyers. Sellers may also benefit from the sustained presence of cash buyers, as Miller points out that “cash-buyer market share is expected to remain elevated due to large equity drawdowns enabled by stronger financial markets.”
After a slowdown in 2024, the luxury market is expected to rebound in 2025, driven by rising bonuses (projected to be 35% higher than last year) and a post-election surge in high-end contract activity. However, inventory constraints remain a challenge, particularly as the pipeline for new construction has dwindled over the past five years. Top-tier properties and new developments continue to command premiums, with buyers favoring the latest offerings over older resales. Additionally, trends such as empty nesters downsizing or purchasing NYC pied-à-terres are expected to persist, with suburban homeowners trading larger homes for luxury apartments in the city.
Overall, the NYC housing market appears poised for positive movement in 2025, with promising trends across various segments. If you’re considering selling, buying, or trading this year and want to map out a plan—whether it happens in the next few months or later in the year—please don’t hesitate to reach out. I’d be happy to sit down with you to discuss your roadmap, with no obligation.