The real estate listing site StreetEasy presented a series of predictions that 2025 may have in store for the market in New York City in a report by StreetEasy Senior Economist Kenny Lee.
Predictions for the New York City Real Estate Market in 2025
Lee came up with five big predictions following a year in which housing costs reached new highs and landmark changes were made within the housing industry. He noted that the rental and for-sale markets will likely be influenced by affordability. These predictions are based on recent trends seen in 2024.
Prediction 1: More Buyers Will Turn to Co-ops Due to Affordability Challenges
The first big prediction is that affordability challenges will lead more potential buyers to look towards getting co-ops. These types of homes are typically cheaper than condos. While the approval process to get a co-op can sometimes be difficult, more potential buyers may be willing to endure this if it means saving a lot of money during a time in which mortgage rates and asking prices are high.
Prediction 2: Suburban Home Shortage Will Keep City Residents from Leaving
The next prediction is that a limit on available suburban homes in the New York metro area will dissuade New York City residents from attempting to leave the area, as the shortage has led to increased competition for the few that are for sale. There were actually more listings for the sales market in New York City compared to these suburbs in 2024, providing more options for buyers and more negotiating power.
Prediction 3: Luxury Market Boom Expected
A boom in the luxury market is the third prediction. High-end properties are becoming more accessible as a result of recent downward trends in prices and interest rates. While December 2023 saw the highest starting price since 2018, at $4.95 million, that number has since plummeted 6.1% to $4.65 million in November 2024. The lower costs open this market up to more prospective buyers, who will seek to take advantage of the trends to get these units at a much better deal.
Prediction 4: New Developments in Queens and Brooklyn Will Drive Demand
Another prediction is that the new developments and amenities that have opened or will soon open in Queens and Brooklyn, as well as in Jersey City and Hoboken, will result in an increased demand within these areas. New rental developments in Queens and Brooklyn have led to the boroughs catching up with Manhattan when it came to rental inventory in 2024. The expectation is this trend will continue in 2025, with rising inventories in these boroughs helping to stabilize the rental market in New York City.
Prediction 5: Increased Demand for Amenities
Lastly, it is likely that there will be an increased demand among New Yorkers for amenities like outdoor spaces, pools and gyms. This is based on the belief that more New Yorkers will want to find comfort and convenience at home. This is especially true for those with hybrid work trends, wherein they work some or most of their job from home.
Conclusion
In conclusion, the real estate market in New York City is expected to experience a number of significant changes in 2025, driven by factors such as affordability, suburban home shortages, and luxury market trends. These predictions are based on recent trends seen in 2024 and offer insights into what the future may hold for buyers and sellers in the New York City real estate market.
FAQs
Q: What are the five big predictions for the New York City real estate market in 2025?
A: The five predictions are: more buyers will turn to co-ops due to affordability challenges, suburban home shortages will keep city residents from leaving, luxury market boom expected, new developments in Queens and Brooklyn will drive demand, and increased demand for amenities.
Q: Why will more buyers be looking at co-ops?
A: The main reason is affordability. Co-ops are typically cheaper than condos, and with mortgage rates and asking prices high, more buyers may be willing to endure the sometimes-difficult approval process to save money.
Q: What is driving the luxury market boom?
A: Recent downward trends in prices and interest rates are making high-end properties more accessible, opening the market up to more prospective buyers.
Q: Why will there be an increased demand for amenities?
A: With more New Yorkers working from home, there will be an increased demand for amenities like outdoor spaces, pools, and gyms to find comfort and convenience at home.
