2025 Real Estate Outlook: What Buyers & Sellers Need to Know

Navigating the Market Trends, Mortgage Rates, and Opportunities Ahead

The State of the Real Estate Market in 2025: What Buyers and Sellers Need to Know

Are We on the Verge of a Hot Spring Market?

You ever get that feeling that something big is about to happen, but it’s just not quite there yet? That’s kind of where the real estate market stands as we roll into the spring of 2025. Inventory is creeping up, buyers are getting antsy, and mortgage rates—while not exactly a steal—are trending in a better direction. So what does it all mean for homebuyers, sellers, and real estate pros trying to navigate the market?

Let’s break it down.

The Market Is Moving, But Inventory Is Still Tight

If you’ve been following real estate trends, you know that the story of the past few years has been a supply problem. That hasn’t changed much. As of late February, contract activity has picked up, and new listings are appearing, but we’re far from an oversupply situation. In fact, nationally, the U.S. remains short about 1.5 million housing units needed to balance the market. That underbuilding problem from the past decade? Yeah, it’s still lingering.

For New York City, where housing dynamics often play by their own rules, it’s a tale of two markets. Some sectors—like pre-war co-ops—are sluggish, while others—like new developments and luxury properties—are seeing more action. If you’re a seller, this means pricing correctly is crucial. Buyers are out there, but they’re being selective.

Mortgage Rates: Slowly, Painfully, Coming Down

Rates are still above 6.5%, but they’re lower than they were at their peak. As of now, 30-year fixed rates are hovering around 6.875%, which is a psychological win for buyers who got spooked when rates crossed the 7% mark. But there’s a catch—there’s still a big spread between mortgage rates and the 10-year Treasury yield, meaning lenders are pricing in some extra risk.

What’s interesting is that jumbo loan rates (often used for luxury purchases) are inching closer to conventional rates, which suggests we might see even more movement in the higher-end market in the coming months.

Cash is Still King—Especially in NYC

Nationally, all-cash purchases have dropped to their lowest levels in a decade. But in NYC? It’s the complete opposite. Roughly 60-65% of deals in Manhattan are still all-cash, which speaks to the strength of high-net-worth buyers and international investors who aren’t sweating interest rates the way traditional buyers are.

Why is this happening? A few reasons:

High competition for desirable properties
Wealthy buyers hedging against inflation by putting cash into tangible assets
Some sellers preferring quick, contingency-free deals

So if you’re a buyer competing in NYC, having cash (or at least a large down payment) is still a major advantage.

The Economy, Inflation, and the “Buffett Signal”

Beyond real estate, the broader economy is in an odd place. Inflation, while not skyrocketing, has been sticky, and the Federal Reserve is in no rush to slash rates. The bond market is expecting one or two rate cuts in 2025, but don’t hold your breath for anything dramatic.

And then there’s Warren Buffett—who’s raising cash. If the Oracle of Omaha is stacking liquidity instead of making big investments, should we be paying attention? Maybe. It signals that even the smartest investors are keeping an eye on market risks, whether they be geopolitical, economic, or financial.

What Does This Mean for Buyers & Sellers?

If You’re Buying:

Rates might drop later in the year, but waiting comes with risks—home prices are still expected to rise slightly (~1%) in 2025.
Be prepared to act fast in the spring market—historically, March through June are the busiest months for transactions.
If you’re financing, be strategic about lender shopping—some lenders are offering incentives like rate buydowns or closing cost credits.

If You’re Selling:

The spring market is the best window to list your home—the top four months for deals are ahead of us.
Pricing correctly is key—overpricing in a cautious market means sitting stale.
Staging matters more than ever—buyers are willing to pay a premium for move-in-ready homes. (Pro tip: If you’re on the fence about staging, consider attending industry events to hear insights from experts!)

Looking Ahead: Will 2025 Be a Good Year for Real Estate?

While we’re not expecting a market explosion, 2025 is shaping up to be a stable, cautiously optimistic year for real estate. The fundamentals are in place—strong buyer demand, a slightly improving rate environment, and an economy that, while uncertain, isn’t flashing major warning signs.

That said, real estate is hyper-local. National trends only tell part of the story, and NYC is often its own beast. If you’re buying or selling, the best move you can make is to stay informed, work with a knowledgeable agent, and be ready to pivot as conditions shift.

Spring is coming, and with it, a wave of new opportunities. Are you ready?