Rates at 6% are the new normal, and from a historical perspective they’re completely fine, especially given the strength of the economy and inflation adjusted wage gains over the past few years.
The insurance industry will certainly bear a substantial brunt of the cost for rebuilding all of the properties destroyed in the wildfires. Unfortunately, as a result, many insurance companies will consider pulling out of these markets and substantial increases in premiums are inevitable.
Inventory levels across many of the markets surveyed continue to contribute to a competitive landscape for buyers, driving median prices upward.
Rates at 6% are the new normal, and from a historical perspective they’re completely fine, especially given the strength of the economy and inflation adjusted wage gains over the past few years.
With the coming prime spring selling season on the horizon and recent inflation data pointing to a pause in rate cuts by the Federal Reserve in the short term and less rate cuts than anticipated in 2025, Real Estate In-Depth recently polled a group of veteran Realtors and Hudson Gateway Association of Realtors officials for their sense of the local markets going forward.
A key theme in their assessments was that activity will be driven in large part by available inventory and whether buyers will come to the realization and be comfortable with the fact that lending rates of 4% and lower are in the rear-view mirror and that rates are likely going to fluctuate between 6% and 7% this year. In fact, earlier this week National Association of Realtors Chief Economist Lawrence Yun predicted that rates could fall slightly to 6.5% by the time the spring selling season begins.
“The Hudson Valley isn’t slowing down. Our housing market is shaped by three key drivers: demographic shifts, housing supply, and interest rates,” she said. “Demand will stay strong, with Millennials and Gen Z entering their peak home-buying years. But the inventory issue isn’t going away—Westchester had less than two months of supply during the peak spring market. We need six for a healthy, balanced market.”
She added that even with rate cuts by the Fed, “relief will be slow and measured, and affordability will still be the biggest hurdle for buyers, especially in areas where new construction lags.” She noted that home builders are trying to fill the inventory gap, but it will take time for availability to return to normal.
Despite the market headwinds, Sejdi, who is an agent for HomeSmart Homes and Estates in White Plains, predicts solid home sales activity in the New York metro area with sales 11% higher than 2024 and prices increasing by approximately 6%.
“This market is ever evolving, and staying ahead means embracing change. If we want real progress, we need smart solutions—zoning updates, better policies for new builds, and creative reuse of existing spaces. Smart policies will be critical to keeping this market moving forward—and keeping buyers in the game,” said Sejdi, who is being officially installed as the 2025 HGAR President at a gala event on Jan. 30 at the Villa Barone Hilltop Manor in Mahopac.
“The key market driver for 2025 is inventory. The market has been starved for inventory for three years now, which has driven sales down to the lowest level since the Financial Crisis of 2008-09,” Rand, who also serves as the Mayor of Nyack, said. “But we’ve seen some positive signs in the past few months, and if that continues, we expect that 2025 sales will be much stronger than this past year. I expect sales will go up in 2025 from their current levels, only because I think we hit a bottom last year and won’t go any lower.”
Rand echoed the refrain from many real estate professionals that the Hudson Valley needs more housing, which would stabilize prices at current levels. “In particular, we need entry-level housing: condos, coops, and smaller, more modest, homes. We need starter homes for people in their 20s or 30s, or they’re not going to be able to afford to live here,” he said.
In terms of mortgage rates and their impact on the market, Rand related, “I think people have to accept that 4% interest rates are not coming back, and even 5% interest rates are unlikely to return anytime soon. Rates at 6% are the new normal, and from a historical perspective they’re completely fine, especially given the strength of the economy and inflation adjusted wage gains over the past few years.”
On a positive note, Fernandez, who has served as HGAR’s Chief Executive Officer since September 2023, said, “Momentum continues to build in the Hudson Valley real estate market and in markets throughout the country. Pending sales in Westchester, the Bronx, and Rockland counties increased in November, reflecting more buyers coming into the market,” she said. “Despite a healthy job market and buyers seemingly adjusting to the new normal of interest rates hovering between 6% and 7 %, insufficient supply continues to impact sales activity.”
She added, “In 2025, we expect to continue to see more demand than supply, resulting in historically low months of supply and fewer sales. Since demand continues to outpace supply, home values are expected to continue to rise significantly. HGAR will continue to advocate on behalf of homeowners and renters, supporting legislation and initiatives that increases supply and create more housing opportunities for all segments of our population.”
Domathoti, who served as HGAR President in 2022, said the 2025 housing market will be heavily influenced by the interplay of housing inventory shortages, fluctuating interest rates, and evolving policies from the National Association of Realtors and recent developments involving the Department of Justice.
“Inventory levels remain a challenge in all three regions. According to HGAR and OneKey MLS data, Manhattan continues to experience limited new housing supply despite ongoing redevelopment projects like Hudson Yards Phase 2,” he said. “Inventory in the Bronx remains tight, particularly for multi-family properties, as demand outpaces new development. In the Hudson Valley, competition for single-family homes has resulted in a 15% decrease in active listings compared to 2024, driving up home prices.”
While interest rates are expected to stabilize in 2025 after recent volatility, affordability remains a concern. Mortgage rates hovering between 6% and 6.5% may deter some first-time buyers, particularly in the Bronx and Hudson Valley, he related.
In terms of how he feels the local residential markets will fare this year, Domathoti said, “The housing markets in Manhattan, the Bronx, and the Hudson Valley will be shaped by inventory shortages, mortgage rate trends, and regulatory developments in 2025. Manhattan’s luxury market will remain strong despite limited supply, while the Bronx’s affordability challenges and infrastructure investments will drive demand for multi-family homes.”
He added, “In the Hudson Valley, low inventory coupled with Fannie Mae’s forecast of mortgage rate stabilization around 6% will sustain strong competition for suburban homes. Additionally, NAR mandates and DOJ-driven reforms will enhance transparency, benefiting buyers and sellers while reshaping brokerage practices in these regions.”
D’Anzica, who served as the 2023 HGAR President, also stressed that the lack of inventory will be the key driver for the regional housing market this year.
“Supply driven market forces will continue to dictate the real estate market's behavior in our region. A lack of housing inventory will ensure that home prices will continue to appreciate, exacerbating the affordability crisis. Sellers will also remain hesitant to sell and then buy a new home with a higher mortgage rate,” he said.
D'Anzica also doesn’t expect any action taken by the Federal Reserve to have any immediate impact on market conditions in the region. “While the Federal Reserve has lowered interest rates modestly, mortgage rates have not substantially followed suit. Even if mortgage rates do respond positively to the Fed's actions, they would do so slowly and over time,” he said. “Renewed optimism in a more favorable business environment because of a more business-friendly administration in Washington will likely have more impact on the housing market in 2025 than Federal Reserve action.”
Inventory levels across many of the markets surveyed continue to contribute to a competitive landscape for buyers, driving median prices upward.
FDIC will relocate to 1166 Avenue of the Americas from the Empire State Building in a 10-year lease.
The TIFIA loan will support the funding of the first phase of the $10-billion bus terminal replacement project, with construction to begin this year.
Martha Eventually settled in Somers, becoming a Realtor where she found her stride, spending decades in the industry.
Receive original business news about real estate and the REALTORS® who serve the lower Hudson Valley, delivered straight to your inbox. No credit card required.
