2024 was largely a year of disappointment for Manhattan real estate. Buyer demand was stifled by elevated mortgage interest rates, while lenders grew disheartened by the flurry of preapprovals that failed to convert to real loan commitments. Sellers, too, faced frustration from reduced showing and bidding activity for their often-overpriced properties. All the while, experienced brokers persevered knowing that–as with all cycles–this too shall pass. And wonder of wonder, miracle of miracles 🎵, the holiday season notwithstanding, we’re finishing the year with a surge of nearly 200 signed contracts for properties priced over $4M since the first Monday of November, including 19 signed during the shortened Thanksgiving week–well above recent averages.
Looking Ahead: Five Predictions for 2025
• Buyer Resurgence Across All Markets
We anticipate a resurgence of buyers for both resale and new development properties. Even mortgage-dependent buyers are adjusting to today’s rate environment with rates likely to hover around 6% for the next couple of years. The pandemic-induced 3% interest rate of 2020-2022 is now a historic anomaly.
• Tight Inventory Will Persist
Inventory levels are expected to remain low. With fewer new development projects in the pipeline, and many sellers waiting for 2026 in hopes of stabilizing and rising values, supply will likely remain constrained.
• Stable to Modestly Rising Prices
If buyer demand increases while inventory stays tight, prices should hold steady or improve modestly providing some stability in the market.
• Renovation Opportunities
John Walkup of Urban Digs forecasts more value in apartments needing work. He notes, “The renovation premium, which soared to nearly 30% during its post-pandemic peak, has been gradually returning to its historical average of around 14%.” As an agent with several “good boned” properties waiting for their moment in the spotlight, I say cheerfully: bring it on!
• Strong Financial Markets Driving Cash Buyers
A robust stock market and anticipated high bonus season should keep cash buyers active, especially at the upper end of the market.
My Crystal Ball is Round
Uncertainty remains about what comes next. Inflation is unlikely to disappear and may even tick upward. Tariffs, labor shortages and the policies of a new, unconventional Washington administration could also impact housing. As my friend and client Gregg S. Fisher said in a recent letter to Quent Capital fund investors (of which I am one): "Entrepreneurs are not just business owners; they are visionaries and relentless optimists who believe deeply in the possibility of a better future.” Experienced brokers share the same optimism. A better Manhattan real estate market will come.