Overall Brooklyn Market Update: March 2025

Brooklyn Returns to Equilibrium: A Level Playing Field for Buyers and Sellers

According to the Elegran | Forbes Global Properties Brooklyn Leverage Index, Brooklyn's real estate market has returned to equilibrium, signaling a market that favors neither buyers nor sellers. Contract activity rose 13.1% month-over-month in February, reflecting a strong seasonal rebound, yet remains 1.2% lower than last year. Meanwhile, inventory has risen 1.4% from January and 3.4% year-over-year, offering more choices for buyers but still historically low enough to sustain pricing power for sellers. With these mixed signals, the Brooklyn market is now firmly balanced.

Mortgage rates, currently hovering around 6.75% and expected to settle near 6.5% for the year, continue to shape buyer behavior. While demand remains steady, buyers are highly selective, scrutinizing every detail and favoring move-in-ready homes over those requiring updates. Sellers who price accurately, invest in professional staging, and ensure their properties stand out are seeing competitive bidding, while those who misprice or neglect presentation are struggling to attract offers. The increased median listing discount of 4.2%—the second-largest monthly jump since April 2023—reinforces this trend, giving buyers room to negotiate on properties that fail to meet expectations.

On the pricing front, Brooklyn’s median price per square foot (PPSF) dipped 1.3% month over month to $964, yet it remains 1.2% higher year over year, demonstrating long-term price resilience despite short-term fluctuations. Meanwhile, the rental market remains historically strong, with median rent holding steady at $3,500 and new lease signings tripling compared to five years ago. This sustained demand for rentals may push more tenants toward homeownership, especially if mortgage rates decline later in the year, injecting fresh demand into the sales market.

As the spring market unfolds, Brooklyn’s balanced conditions will likely persist. Inventory is expected to rise seasonally but remain below historical averages. Well-prepared sellers will continue to attract strong offers, while patient, strategic buyers can find negotiation opportunities in select segments. Those who understand neighborhood-specific dynamics, price trends, and market timing will be best positioned to succeed.

Elegran | Forbes Global Properties Brooklyn Leverage Index

The Elegran | Forbes Global Properties Brooklyn 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 just the exact numbers that matter - it's the direction and slope of the trend. After a brief seller’s market in the spring of 2024, Brooklyn shifted toward buyers over the summer, only for sellers to regain momentum in the fall as contract activity surged. November tilted slightly back to buyers, but the year ended with a seller’s edge. In January 2025, the market softened again in buyers’ favor due to the typical post-holiday slowdown, which was temporary. By February 2025, the market stabilized, returning to equilibrium. 

Brooklyn Supply

Brooklyn’s housing supply continued its seasonal rise in February, increasing 1.4% from January to 2,924 units. Year over year, inventory has grown 3.4%, reflecting a slight decline in residential sales contracts compared to last year. While this suggests a modest easing of inventory constraints, supply remains well below the higher levels seen in 2021 and 2022, reinforcing Brooklyn’s long-term trend of tightening inventory. However, the month-over-month increase should be considered within the broader context of persistently low inventory over the past two years.

What does this mean for:

- BUYERS: The gradual rise in inventory provides more options and slightly reduces competition in certain segments. While this can create opportunities, well-priced homes continue to move quickly, so buyers should act decisively when they find the right fit. In segments where supply has increased more significantly, there may be more room for negotiation, giving buyers a slight edge in price discussions.

- SELLERS: Even though inventory is increasing, Brooklyn remains a supply-constrained market, helping preserve pricing power. Well-presented and competitively priced homes continue to attract strong interest, particularly in neighborhoods with limited new listings. Sellers in these areas still hold an advantage, while those in neighborhoods with growing supply may need to be more strategic in pricing and presentation.

Moving into spring, inventory is expected to continue its seasonal climb but will likely remain below historical averages. This creates a balanced environment where buyers and sellers who understand their specific neighborhood dynamics and price trends will be best positioned to make the most of current market conditions.

Brooklyn Demand

After a seasonal slowdown in January, Brooklyn’s contract activity rebounded strongly in February, rising 13.1% month over month to 501 signed contracts. This increase reflects a strong seasonal recovery, but the 1.2% year-over-year decline compared to February 2024 suggests the market is slightly more tempered than last year’s pace. While demand remains healthy, this subtle cooling indicates a shift toward a more balanced environment.

What does this mean for:

- BUYERS: The month-over-month jump in contract activity signals renewed competition, particularly for well-priced or unique properties. However, the slight year-over-year decline presents potential negotiating opportunities in certain segments. Buyers should be prepared to move quickly on standout listings while leveraging the slight easing in demand to negotiate more favorable terms in areas with increased supply.

- SELLERS: The 13.1% month-over-month increase in signed contracts highlights strong buyer engagement as the market heads into spring. Well-positioned properties continue to attract attention, and with inventory still historically low, sellers maintain pricing power. While the market may not be as frenzied as in early 2024, demand remains steady, and strategically priced homes should see competitive offers.

Looking ahead, contract activity is expected to accelerate further into spring, potentially closing the slight year-over-year gap as buyers who delayed purchases during winter reenter the market. If mortgage rates stabilize or decline, demand could strengthen further, reinforcing a competitive yet measured market environment.

Brooklyn Median PPSF

Brooklyn’s median price per square foot (PPSF) showed early signs of stabilization in January, but in February, it declined 1.3% to $964. While this month-over-month dip suggests minor price fluctuations, the 1.2% year-over-year increase indicates that long-term price resilience remains intact despite short-term shifts.

What does this mean for:

- BUYERS: The recent decline in PPSF presents tactical opportunities, particularly in areas where competition has eased. However, the year-over-year price increase signals sustained demand, meaning buyers should not expect steep discounts on premium properties in sought-after neighborhoods. Acting strategically and identifying areas with softer pricing will be key to securing value in the current market.

- SELLERS: While the monthly dip highlights the importance of realistic pricing strategies, the year-over-year growth reinforces Brooklyn’s strong value proposition. Sellers should price homes competitively based on recent comparable sales rather than banking on rapid price appreciation in the immediate term. Well-positioned properties remain attractive to buyers, particularly in neighborhoods with limited new inventory.

These mixed signals create a balanced pricing environment where success depends on neighborhood-specific dynamics rather than borough-wide trends. Expect continued price stability with the potential for modest appreciation as spring inventory meets steady buyer demand in the months ahead.

Brooklyn Median Listing Discount

Brooklyn’s median listing discount increased to 4.2% in February, up 0.9% from January and 0.3% year-over-year, marking the second-largest monthly discount since April 2023. This shift reflects short-term pricing adjustments, though discounts may begin to tighten as market activity accelerates in the spring.

What does this mean for:

- BUYERS: The expanded listing discount creates stronger negotiating opportunities, particularly for properties that have lingered on the market. Buyers should use this data to negotiate more favorable terms, but they should also recognize that premium properties in high-demand neighborhoods still command prices closer to asking. While discounts exist, competition remains for well-positioned homes.

- SELLERS: Inventory constraints continue to provide market leverage to sellers despite the recent increase in listing discounts. The key to minimizing concessions is strategic pricing that aligns with current market conditions. Sellers who overprice risk needing to make significant adjustments, while those who price competitively can still attract strong offers with minimal negotiation.

While discount trends appear to favor buyers, the overall seller’s market remains intact, with well-priced properties continuing to see strong demand. As spring activity ramps up, expect disciplined sellers to maintain their advantage while overpriced listings face growing pressure to adjust expectations.

Rental Remarks

Brooklyn’s median rental price edged up 0.1% in January to $3,500, remaining unchanged year over year. Meanwhile, new lease signings surged to three times the volume recorded five years ago. This sustained demand underscores Brooklyn’s remarkably stable rental market, with lease activity at historic highs despite elevated price points.³

The resilience of the rental market suggests that demand for housing remains strong, even as affordability challenges persist. However, as rents continue to hold firm, more renters may begin weighing the cost of ownership versus renting, potentially adding fresh demand to the sales market. If mortgage rates stabilize or decline, this could accelerate the shift, particularly among long-term renters looking for greater financial predictability.

Brooklyn’s rental market remains a key indicator of overall housing demand, with steady prices and record lease signings reinforcing its strength. As the spring market unfolds, rental conditions will play a crucial role in shaping buyer sentiment, influencing whether more renters transition into homeownership or continue leasing amid limited affordability options.

Mortgage Remarks

The 30-Year Fixed Rate JUMBO Mortgage Index currently stands at 6.78%⁴, while the average JUMBO Annual Percentage Rate (APR) stands at 6.55%⁵. Although rates rose in the fall and into the winter of 2024, there has been a slight decrease recently. Additionally, in late January, the Federal Reserve chose to keep interest rates unchanged rather than lower them.

The broader expectation is that rates will remain in the 6.5% range through this year and into the next, reflecting a shift in sentiment that higher rates are here to stay for the foreseeable future.

However, interest rates are no longer the primary catalyst for market activity. Instead, buyers and sellers are adjusting to the new normal, making decisions based on personal needs and timelines rather than waiting for further rate drops. This shift signals a market driven more by necessity than speculation, reinforcing steady transaction volume despite elevated borrowing costs.

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 6.55%. 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

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feel free to contact us at info@elegran.com or 

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