Manhattan and Brooklyn luxury market thrives amidst downturn

In the recent real estate landscape, Manhattan and Brooklyn have been witnessing a significant divide between luxury and non-luxury market sectors. As of June 2025, the market has shown cautious improvement, particularly notable in the luxury segment where properties priced at $4 million and above in Manhattan and $2 million and above in Brooklyn are outperforming their lower-priced counterparts. Cash purchases dominate the market, with 69% of transactions in Manhattan being cash deals. The increase in mortgage rates has placed pressure on buyers who depend on financing, leading to a noticeable reduction in contract activity for units priced under $4 million, as buyers retreat from the market due to higher payment costs. On the other hand, the luxury segment has remained resilient, with signed contracts for properties over $4 million either matching or exceeding seasonal averages despite the macroeconomic challenges. The contrasting inventory trends further emphasize this split. In Manhattan, the inventory of homes over $4 million has decreased by 16% year-over-year, while non-luxury properties have seen an inventory rise—4% for homes priced under $4 million and 3% for those in Brooklyn under $2 million. Consequently, this surplus of non-luxury listings has resulted in increased price cuts, with listings under $4 million in Manhattan witnessing 11% more price reductions compared to the previous year. Notably, Brooklyn has seen price reductions more sharply acute in the under $2 million market, which experienced a 10% increase in price cuts versus only 5% in the over $2 million market. Prices in the luxury segment have shown positive momentum, with a year-over-year increase in price per square foot (PPSF) for luxury residences. Specifically, sales data indicates a 9% PPSF increase for properties above $2 million in Brooklyn, while the sub-$2 million tier registered no price changes. This divergence presents a unique opportunity for potential homebuyers in the non-luxury market. As sellers grapple with higher mortgage rates affecting buyers’ budgets, there may be openings for strategic purchases where others are hesitant. Overall, the dichotomy in Manhattan and Brooklyn's real estate markets underscores shifting demand dynamics, with luxury properties largely unaffected by macroeconomic stresses, while non-luxury segments contend with heightened pressure, resulting in increased inventory and price cuts. The evolving landscape illustrates the complexities inherent within real estate markets, focusing on timing as an essential element for potential buyers.