Sales of Co-ops and Luxury Condos Expected to Rebound in 2025

Now that the ball has dropped on Times Square, StreetEasy's senior economist Kenny Lee has gazed into his crystal ball and dropped his predictions for the New York City real estate market in 2025. Here are the highlights:

1. Co-ops will make a comeback. Co-op sales slipped by 1.3% last year, compared to 2023. Expect that to change in 2025. Amid high asking prices and a shortage of affordable homes on the market, 2025 will likely see buyer interest surge for co-ops and their relatively lower price tags. Last year, condos sold for 26% more on average than co-ops with similar square footage and amenities. However, buyers sometimes avoid co-ops due to the often arduous approval process. But as mortgage rates and asking prices remain high, more buyers may begin to see co-ops as worth the effort.

With fewer new co-op listings for sale compared to condos, co-op owners looking to sell next year should be well-positioned to do so. As the spring home-shopping season approaches, co-op sellers should start thinking about pricing and marketing their home strategically to attract these bargain-hunting buyers.

2. The luxury condo market will boom. Despite its strong finish in 2024, the city's luxury sales market has been considered lukewarm at best over the past two years. But in 2025, the luxury sales market will likely heat up. Lofty asking prices in recent years, and a shrinking pool of buyers able to afford them, have resulted in slower sales. However, since its peak in December 2023, the starting price of the luxury segment is down 6.1% as of November this year, putting more potential buyers within reach and suggesting we’ll see an increase in luxury transactions next year.

3. It will be all about amenities, amenities, amenities. In 2024, both renters and buyers increasingly looked for amenities that meant they didn’t have to leave their apartment building. In New York City, searches for apartments with outdoor space have jumped 116.6%, while searches for pools and gyms increased 61.8% and 11.2%, respectively. And in-unit laundry and central air will likely remain the top must-have amenities for most New Yorkers.

Building amenities aren’t anything new, of course, but they're becoming more pivotal than ever. With housing costs as high as they are, some New Yorkers don’t seem to mind spending even more for sought-after amenities that make staying home more comfortable and convenient. Plus, with hybrid work as the norm, there are even more reasons to stay at home with the utmost enjoyment.

4. Mortgage rates will stop being a barrier to sales. Rates on 30-year mortgages, which are tied to bond markets and generally reflect investors' mood about economic growth, were around 7% when 2024 began and have dipped only a bit in the months since. Still, as 2025 begins, rates have stayed below their recent highs of 8% in fall 2023, and their movement has generally been downward, a favorable sign.

“I think people are finally starting to come to terms with the fact that we’re not likely to see 2% rates again in the near future,” Lee tells Crain's. “While it’s difficult to predict where rates will go exactly, I’m expecting a busier spring home shopping season in 2025 than we saw (in the past two years)."