Here’s What Happened in 2025

Manhattan and Brooklyn entered 2025 with a wide range of expectations. Looking back over the last few years that brought us to this point, many believe that 2023 marked the market’s post-COVID rebound floor, following the sharp correction caused by the interest rate spike in the summer of 2022. From that base, both the Manhattan and Brooklyn real estate markets began their climb back—first through a year of stabilization and recovery in 2024, and then with hopes for measured growth in 2025.

In some regards, that prediction proved accurate. As 2025 began, it was positioned as a year of growth—though what ultimately followed was less of a boom and more of a steady return to sustainable activity. While several metrics reflected improvement, the big jolt came early in the year with what became known as “Liberation Day”—the federal government’s sudden decision to reinstate tariffs. That announcement shocked the market, slowed momentum, and created widespread uncertainty. Still, in the months that followed, both the Manhattan and Brooklyn markets gradually regained their footing, stabilizing and regaining traction as the year progressed.

Another major development was the FARE Act, which went into effect in June 2025. Intended to reduce rental prices by requiring landlords to pay the broker fee instead of the tenant, the policy ultimately failed to deliver on its promise. In Brooklyn, rents remained near record highs, hovering around $3,700 to $3,800 per month. In Manhattan, they climbed even higher, ranging from $4,500 to $4,700 per month. Rather than absorbing the cost, landlords largely passed the broker fee along to tenants by raising rent prices. Most brokers agree that the FARE Act changed the mechanics of how deals were structured—but not the actual economics. In hindsight, it reallocated costs without creating meaningful affordability.

Inventory across both boroughs remained within historical norms in 2025. From January through November, Manhattan’s listing inventory rose by about 4% year-over-year. Brooklyn saw a similar increase in overall supply, but conditions remained and seemed tighter for buyers. In many neighborhoods across Brooklyn, well-priced listings attracted multiple offers, leaving buyers frustrated by limited options and strong competition. The contrast between the two boroughs was clear: while Manhattan gradually regained its footing, Brooklyn continued to feel like a seller’s market throughout much of the year.

Contract activity continues to tell a story of recovery—particularly in Manhattan. The total number of properties put into contract was up nearly 3% year-over-year, and during the peak months of the 2025 selling season, activity surged by as much as 10%. Renovated, well-priced listings were especially sought after and moved quickly, underscoring the importance of condition and pricing in the 2025 market.

The luxury sector in Manhattan further reinforced the broader trend of recovery in 2025. Properties priced at $4 million and above saw a meaningful rebound compared to 2024. Year-to-date, 1,436 luxury contracts were signed—an 11% increase year-over-year. The total luxury dollar volume reached approximately $1.977 billion, up sharply from $1.163 billion in 2024.

Luxury buyers continued to strongly favor condos over co-ops, with a roughly 3:1 ratio, highlighting the ongoing demand for flexibility, newer construction, and fewer restrictions—a trend consistent with recent years. But perhaps the most powerful driver behind the luxury market’s resurgence was pricing, which was approximately 4% lower than the prior year. This value proposition helped reignite demand and bring lux-market buyers off the sidelines.

Once again, Manhattan’s luxury market outperformed expectations, managing to thrive in spite of economic headwinds, tariff-related concerns, political uncertainty, and broader macro pressures. It will be especially interesting to watch how ultra-high-net-worth individuals and billion-dollar buyers continue to engage with Manhattan real estate as we head into 2026.

Brooklyn, by contrast, saw contract activity dip slightly, down 1.3% year-over-year, as some buyers stepped to the sidelines amid tighter supply, elevated pricing, and increased competition. Even so, demand remains resilient, especially in core neighborhoods where quality inventory continues to attract strong interest.

Despite the early disruption from “Liberation Day,” 2025 proved to be a resilient year—especially for Manhattan. The market’s ability to regain momentum after a policy shock speaks to the underlying strength of buyer demand. Still, it’s hard not to wonder how much stronger the year might have been had the tariffs not been reintroduced. Even with that headwind, the year finished with more contract activity than 2024, and the market showed signs of renewed health across both boroughs.

Looking ahead to 2026, the big question is: will the growth continue? If 2025 was a moderate growth year, will 2026 bring further gains—or will there be another unexpected shift, like "Liberation Day," that alters the landscape? Only time will tell. The first few weeks of the January 2026 selling season should offer a valuable glimpse into what’s ahead, as sellers begin to position their listings and buyers decide whether to jump back into the market.

Sources: Donna Olshan/The NYC Luxury Market Report and John Walkup/Forbes

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