Brooklyn by the Quarter - Q2 2025

Co-ops come back, The FARE Act goes into effect, and stubborn interest rates keep inventory low.

Casey Soloff is a Licensed Real Estate Salesperson with Compass, a 20 year resident of Brooklyn, and founder of the monthly Dadurdays meetup at Wild East Brewing Co. in Gowanus.

Q2 2025 delivered a few interesting developments worth noting. While the rental market was adjusting to the new reality of the FARE Act, the sales market had its own story to tell: co-ops posted notably strong performance with sales up 12.5% year-over-year and median prices jumping 42%, while condos saw their first significant decline in recent memory.

It's a reminder that Brooklyn's diverse housing stock creates opportunities across all segments, even when broader market conditions remain challenging.

The Co-op Surprise

Co-ops have always been a significant part of Brooklyn's housing landscape, but Q2 showed them performing better than usual. Sales jumped 12.5% year-over-year, with median prices rising 42% and average prices climbing 28%. This happened while condo sales actually declined 6.7% from the same period last year.

What drove this stronger co-op performance? A few factors seem to be at play:

Affordability Matters More in This Rate Environment. With mortgage rates still elevated from their pandemic lows, buyers are paying closer attention to total costs. Co-ops offer ownership opportunities with lower closing costs and at lower price points—the median co-op sold for $520,000 this quarter compared to $1.07 million for condos.

Neighborhood Renaissance. Much of the co-op activity centered on Northwest Brooklyn's historic brownstone districts: Boerum Hill, Brooklyn Heights, Clinton Hill, and Cobble Hill. These areas have always had strong co-op inventory, but buyers are now recognizing the value of well-maintained buildings with lower carrying costs.

Streamlined Approval Processes. Several agents report that co-op boards are becoming more pragmatic about their approval standards, understanding that overly restrictive policies translate to longer marketing periods and reduced sale prices.

Luxury Market Momentum Continues

While co-ops grabbed headlines, Brooklyn's high-end market maintained its impressive performance. Houses selling between $2-3 million saw transaction volume spike 36% year-over-year, and properties above $3 million jumped 34%.

This sustained luxury demand reflects several ongoing trends. Remote work policies continue enabling buyers to prioritize space over commute times. Family formation drives moves from Manhattan apartments to Brooklyn houses. And international buyers view Brooklyn as an attractive alternative to increasingly expensive Manhattan markets.

The luxury surge isn't just about volume—it's driving price appreciation too. Average house prices increased 7.1% year-over-year, with median prices up 6.6%.

Market Headwinds Persist

Despite positive sales numbers, underlying market conditions remain challenging. New listings declined across all property types: down 6.5% for houses and 3.3% for condos. Many homeowners purchased or refinanced during the 2020-2022 period when rates were near historic lows, creating a "rate lock" effect that's keeping inventory constrained.

This supply shortage is particularly acute for condos, where active inventory jumped 17.6% year-over-year but much of that reflects properties sitting longer rather than new supply entering the market. The average discount on condo sales was just 3%, suggesting sellers still have pricing power despite softer demand.

Rate Reality Sets In

Remember when we thought the Fed's September rate cut would mark the beginning of a sustained decline in borrowing costs? Q2 reminded us that mortgage markets operate according to their own logic.

While the federal funds rate has continued its downward trajectory, mortgage rates have remained stubbornly elevated, influenced by everything from employment data to Treasury yields to lender appetite for risk. The gap between rate expectations and rate reality continues to shape buyer behavior.

That said, innovative lender programs are helping bridge the affordability gap. Several banks are offering aggressive rate buydowns, enhanced asset-based qualification programs, and relationship banking incentives that can meaningfully reduce borrowing costs for qualified buyers.

FARE Act Creates New Rental Dynamics

The biggest rental market story of Q2 wasn't captured in our sales data: the June 11th implementation of the Fairness in Apartment Rental Expenses (FARE) Act fundamentally changed how broker fees work in New York City.

There's widespread confusion about what the law actually does. The common misconception is that brokers can no longer collect fees from tenants. That's not quite right.

The truth is more nuanced: if a tenant hires an agent to help them search for apartments, that agent can absolutely still collect a fee from their client. The FARE Act only prohibits landlord-hired agents from charging fees to tenants. So if a landlord lists an apartment using a broker, that broker must be compensated by the landlord, not the renter.

Interestingly, it remains perfectly legal for landlords to pay both their listing agent and a tenant's buyer agent—similar to how residential sales transactions typically work. This dual compensation structure could become more common as the market adapts.

Though the FARE Act has certainly lowered the initial expense of renting in the city, its net effect appears to have been detrimental to tenants, as was predicted by many in the business. Now that the cost of a listing agent has fallen to landlords, rents have increased to offset this expense. This also means that annual increases are on top of larger base rents.

Commission Evolution Continues

The industry changes that began reshaping agent compensation last year continued evolving in Q2. While most sellers still offer buyer agent commissions—recognizing them as smart marketing investments—the conversation has shifted.

Buyer representation agreements are becoming standard practice, giving agents and clients clarity about compensation expectations upfront. This transparency benefits everyone: sellers understand their total marketing costs, buyer agents secure predictable compensation, and clients receive dedicated representation throughout their search.

Looking Ahead

Q2's co-op comeback illustrates an important principle: Brooklyn's market depth creates opportunities across all property types and price points. While luxury condos and single-family houses often dominate headlines, savvy buyers are finding value in overlooked segments.

As we head into summer, several factors will shape market direction. Interest rate movements remain unpredictable but trending favorable. Inventory constraints persist but may ease as sellers adjust to current rate environments. And buyer preferences continue evolving as remote work policies, family formation, and lifestyle changes drive housing decisions.

Ready to Navigate the Market?

Whether you're considering a co-op in Clinton Hill, a townhouse in Park Slope, or anything in between, Q2's data reinforces that Brooklyn's market rewards informed decision-making and strategic timing.

If you're thinking about buying or selling, or just want to discuss how these trends might affect your specific situation, I'm always happy to chat. Reach out by phone or email, or follow me on Instagram for ongoing market insights.

Enjoy the summer, and keep an eye out for my Q3 update this fall.