January has set an optimistic tone for the real estate market, offering a glimpse into what the rest of the year may hold—and the outlook is strong. Traditionally a quieter month, this year defied expectations with a notable 12% increase in signed contract activity compared to January 2024. We are seeing this translate into multiple showings and contracts out personally.
A shift in market dynamics is bringing buyers and sellers closer to alignment. Sellers are moving away from unrealistic pricing expectations, while buyers are adapting to the ‘new normal’ of interest rates—many recognizing that higher rates often signal a thriving economy. Properties that lingered on the market are now finding buyers, thanks to price adjustments and the boost of bonus season. Adding to the energy are surging equity markets, further fueling confidence in real estate investments.
Lack of Inventory: Manhattan’s housing inventory saw a sharp 17% drop from December 2024 to January 2025—the steepest monthly decline in over a decade, according to a report from real estate analytics firm UrbanDigs. Total supply has now reached levels last seen in 2016, which for many was the top of the market as far as pricing.
Ultra-Luxury Condo vs Coop Spread Grows: In 2024, Manhattan’s high-end co-op market saw a significant slowdown, with just 34 sales priced at $10 million or more—a nearly 50% drop from 64 sales in 2014. By contrast, luxury condo sales remained more resilient, declining just 12% over the same period, from 171 to 151 transactions. The steep decline in high-end Manhattan co-op sales stems from stringent board restrictions and evolving buyer demands, whereas condos, favored for their ease of purchase and contemporary appeal, remained relatively stable. As buyers navigate an evolving market, condos continue to hold stronger appeal in the ultra-luxury segment.
Luxury Market: $10 million-plus home sales surged across 78% of the top U.S. markets in 2024. While the attainable sector has experienced a sales downturn for consecutive years, buyers of the most lucrative homes, fueled by massive wealth creation, have kept the $10 million-plus market thriving, not only in established hubs but also in emerging destinations like Snowmass, Colorado, and Nashville, where demand for premier properties soared.
New Development Trends: The designs hitting the market today were planned two years ago, making current trends easy to anticipate. Work-from-home areas have become a standard feature in new homes, reflecting the lasting shift to hybrid work in a post-COVID world. Health and wellness amenities—such as home gyms, meditation rooms, saunas, and air purification systems—are now essential as buyers prioritize well-being. Looking ahead, several societal and economic factors, including delayed marriage and parenthood, increased longevity and aging alone, greater financial independence, affordability challenges, and evolving lifestyle preferences, will drive a rise in single-home buyers. We believe this shift will increase demand for smaller homes designed for individual living, reshaping purchasing decisions and the future of housing development.
Rental Market: Manhattan’s housing inventory is rapidly declining as high mortgage rates keep many prospective buyers in the rental market. With vacancy rates remaining low across the city, new construction has been essential in meeting rental demand. Notably, a construction surge in the outer boroughs has expanded the share of modern buildings in New York’s rental landscape. In December, 26.2% of the city’s rentals were in buildings constructed after 2010, up from 21.9% the previous year. For renters seeking specific amenities, the best opportunities may be found across the rivers in 2025.
Compass Introduces Compass One: Compass One is the first-ever, all-in-one, client dashboard designed to connect us through every phase of your real estate journey for you to experience 24/7 transparency, and seamless collaboration at every stage. From gaining insights into the market to managing documents and having instant access to important tasks and resources. Compass One redefines the home-buying and selling experience — giving you clarity and confidence every step of the way.
Cycle For Survival: We’ll be participating in Cycle for Survival this March, a cycling event that raises crucial funds for groundbreaking cancer research at Memorial Sloan Kettering Cancer Center. Every dollar donated directly impacts the lives of those battling cancer.
If you’re interested in supporting this cause you can find the fundraising page here! Your contribution, no matter the size, will make a real difference.
