Elegran Manhattan Market Update February 2025: Buyers Gain Ground, But Market Stays Competitive

Overall Manhattan Market Update: February 2025

Buyers Gain Ground, But Market Stays Competitive

Manhattan’s residential real estate market shifted toward equilibrium in January, as the seller’s advantage seen in late 2024 gave way to more balanced conditions. January’s data reflects a market adjustment after the holidays, with rising supply, steady demand, and increased buyer negotiating power for some properties. While contract volume dropped 10% from December, it remained identical year over year at 714 contracts signed, signaling stability rather than a downturn. Meanwhile, inventory increased 5.7% month over month to 5,552 units, though it remains 5.4% below January 2024 levels.

On a pricing front, the median price per square foot (PPSF) declined 2.7% month-over-month to $1,331, but maintained a 0.2% year-over-year gain, reinforcing the underlying price stability. The median listing discount widened slightly to 4.8%, giving buyers more room to negotiate than December’s tighter spreads. These shifts suggest that the seller-favorable conditions of late 2024 were driven by a temporary supply squeeze and December’s unusually strong contract activity. With inventory rising and contract volume moderating, buyers are now gaining a slight advantage—but the market remains efficient and stable rather than favoring one party decisively.

Despite this shift, pricing and presentation remain critical. Well-priced, well-positioned homes continue attracting strong buyer interest, while overpriced or those needing renovations sit longer, reinforcing a punishingly efficient market that rewards strategic sellers and discerning buyers. The efficiency of today’s market means sellers who fail to meet buyer expectations on price and condition will struggle. At the same time, those who adapt to shifting dynamics will continue to find success.

Several key forces will dictate Manhattan’s market trajectory in the coming months, including inflation trends, what the Federal Reserve does with interest rates, and the ripple effects of tariffs and global trade tensions. These macroeconomic factors will shape buyer confidence, affordability, and transaction volume. Meanwhile, rising rents could push more renters to become buyers, adding fresh demand pressure to the sales market in the coming months. At the same time, the ongoing year-over-year inventory decline will reinforce price stability, potentially setting a firm price floor and keeping upward pressure on values despite short-term fluctuations.

As Manhattan’s market settles into 2025, the current equilibrium presents opportunities for both buyers and sellers. Buyers have gained some negotiating power, but well-priced properties still see strong competition. With realistic expectations, strategic pricing, and an understanding of neighborhood-specific trends, buyers and sellers can leverage this balanced market to their advantage.

Elegran | Forbes Global Properties Manhattan Leverage Index

The Elegran | Forbes Global Properties Manhattan Leverage Index2 is powered by four indicators: supply, demand, median price per square foot (PPSF), and median listing discount.??

It informs us whether the current is a buyer’s or a seller’s market, i.e., which party possesses transactional leverage. Looking at the graph below, this is indicated by the direction of the curve, where:

- An increasing trend from left to right indicates a seller’s market

- A decreasing trend from left to right indicates a buyer’s market

Our indicator also informs us regarding the relative strength of that leverage, indicated by the slope of the curve, where:

- A gentle slope indicates a weak advantage by one party over the other

- A sharp slope indicates a strong advantage

It's not the exact numbers that matter most - it's the direction and slope of the trend. Over the past two years, Manhattan’s residential real estate market has been defined by rapid shifts in leverage between buyers and sellers. This volatility continued into early 2025, with January marking another pivotal moment. While the final quarter of 2024 saw sellers firmly in control—peaking in December—January reversed course, tilting the advantage back toward buyers. This persistent back-and-forth underscores an active market still searching for stability. Rather than signaling uncertainty, this dynamic presents short-term windows of opportunity for those who can move decisively. Whether buying or selling, timing the inflection points in this cycle could be the key to maximizing value.

Manhattan Supply

Manhattan’s residential real estate market added 309 new units in January—a 5.7% month-over-month increase—bringing total inventory to 5,552 properties for sale. This rise reflects the typical post-holiday influx as sellers position themselves ahead of the more competitive spring market.

However, despite this short-term gain, inventory remains 5.4% lower than in January 2024, reinforcing the underlying supply constraints that continue to shape market dynamics. With steady buyer demand, the result is a punishingly efficient market, where well-positioned, high-quality properties attract multiple offers while those mispriced or lacking appeal struggle to gain traction.?

What this means for:

- BUYERS: Remain highly selective, seeking the best opportunities and unwilling to settle.? Expect more new inventory as the spring season unfolds, although competition for top-tier properties will remain strong.??

- SELLERS: The year-over-year decline in supply prevents downward pressure on prices.? While more listings will hit the market this spring, demand is expected to rise alongside it, particularly as renters may transition into buyers as the rent vs. buy equation has shifted.??

Interest rates will remain a key driver in buyer demand and seller decision-making. While a seasonal increase in supply is expected, accelerating demand should absorb much of this inventory, keeping the market balanced.

Manhattan Demand

Historically, January sees a modest uptick in contract activity compared to December. However, this year bucked the trend, with contract volume falling 10% month-over-month. The decline isn’t necessarily a sign of weakness—it’s largely a result of December’s unusually strong contract activity.

Yet, January 2025 mirrored January 2024 in contract volume, with 714 contracts signed, underscoring the market’s stability and resilience despite persistently high interest rates and constrained inventory. While the pace cooled from December, buyer engagement remains solid following the late 2024 rebound, reinforcing a market that continues to attract demand.

What this means for:

- BUYERS: The slower contract pace could create stronger negotiation opportunities for properties that lingered on the market during the holiday season. However, high-quality homes in prime locations still attract competition, so remain prepared to move quickly on the right opportunity.??

- SELLERS: While December’s momentum eased, the year-over-year stability signals steady demand and no major shifts in market confidence. Pricing and positioning remain critical - properties that align with buyer expectations continue to perform well.?

Despite January’s cooldown, early-stage buyer activity was strong, pointing to a likely rebound in contract signings for February and March. The recent rise in supply and dip in demand momentarily shifted leverage toward buyers—but expect this to be short-lived.?

Manhattan Median PPSF

Manhattan’s median price per square foot (PPSF) declined 2.7% month-over-month to $1,331 in January, a more pronounced drop than December’s 1.1% dip. This shift reflects seasonal patterns and the closing of deals negotiated in late 2024 rather than a fundamental change in market strength.

However, zooming out reveals a different story—despite short-term fluctuations, PPSF remains 0.2% higher year-over-year, reinforcing the market’s underlying price stability.

What this means for:

- BUYERS: The recent PPSF decline offers a potential opening for buyers waiting on the sideline.? Additionally, prices have likely found the floor, making widespread deep discounts unlikely as the stage is set for prices to be pressured to the upside.??

- SELLERS: While the monthly decline may raise concerns, year-over-year stability confirms strong market fundamentals.? Realistic pricing remains key as properties priced to reflect current conditions - not outdated peak levels - will attract buyers.??

Overall, Manhattan may finally be on the verge of breaking out of its eight-year price ceiling.

Read more of Elegran’s insights on this topic in this Forbes article.

Manhattan Median Listing Discount

The median listing discount for Manhattan residential apartments increased slightly in January 2025, rising 0.3% to 4.8% compared to December. This modest increase suggests buyers found a bit more negotiating leverage post-holiday. However, the year-over-year trend tells a different story—listing discounts are 0.6% lower than in January 2024, signaling greater pricing alignment and sustained market stability.

This dual dynamic—slightly more flexibility month-over-month but firmer pricing year-over-year—reflects a market finding its equilibrium.

?What this means for:

- BUYERS: The small rise in listing discounts presents an opportunity for negotiation, particularly on properties that remained on the market through the holiday season and have had price reductions.? Expect, though, selective flexibility.? While some sellers may adjust, the overall market remains stable.??

- SELLERS: While discounts ticked up slightly, the year-over-year decline suggests sellers still hold stronger positioning than in early 2024.? Pricing smartly is key.? By aligning with market realities, sellers will position their homes competitively while maintaining leverage.??

The current listing discount trends signal a balanced market, where neither buyers nor sellers have a decisive edge. This equilibrium supports sustainable transaction volumes and pricing stability, benefiting those who approach negotiations with a clear strategy and market awareness.

Rental Remarks

In December 2024, the median rent in Manhattan rose by 2.9% from the previous month, reaching $4,334. This month-over-month increase aligns with the year-over-year trend, which shows a significant 7% rise. Additionally, rents for existing rentals continued to grow at a faster annual rate than those for newly developed units.3

Mortgage Remarks

The 30-Year Fixed Rate JUMBO Mortgage Index is currently at 6.87%?, while the average JUMBO Annual Percentage Rate (APR) stands at 6.7%?. Although these rates declined in late August and into mid-September, they have since risen by 80 basis points from their mid-September low. Additionally, in late January, the Federal Reserve chose to keep interest rates unchanged rather than lowering them.

As economic uncertainty declines, interest rates are expected to stabilize. This stabilization should provide much-needed confidence for both buyers and sellers, encouraging transactions and alleviating market gridlock. A more predictable interest rate environment can strengthen trust in the real estate market, fostering increased activity and smoother transactions.

Investor Insights

The total return on real estate investments is driven by net rental income and capital appreciation. Manhattan cap rates are currently between 3% and 3.4% for all-cash investors. Unfortunately, investors using a large percentage of leverage face challenges in generating net income, given the average JUMBO mortgage APR of 6.7%. Timing and a strong USD may afford foreign investors, depending on their native currency, the opportunity to realize significant capital gains upon selling their assets.

References

1. Data courtesy of?UrbanDigs

2. According to the?Elegran | Forbes Global Properties?Brooklyn Leverage Index

3. Data courtesy of?Miller Samuel, Inc.

4. Data courtesy of?Federal Reserve Bank of St. Louis

5. JUMBO mortgage rate APR data courtesy of?Bank of America,?Chase, and?Wells Fargo