The U.S. rental market has been in constant flux over the past few years, from the pandemic to economic and technological changes. As we close the books on 2024, many landlords wonder what to expect in the coming year. No predictions can be a guarantee with a political shift on the horizon and the volatility of elements like global conflicts and natural disasters, but here are five rental market trends we anticipate in the coming year:
Rent Increases Stabilizing. Rent prices have risen in recent years due to high demand and growing maintenance costs. However, with many newly built rental units coming on the market and declining mortgage rates providing buying opportunities, the gap between supply and demand for rental units will narrow. Continuing demand and inflation will likely keep rental prices on an upward trend but at lower growth rates than before.
Remote / Hybrid Work. While some companies have implemented policies requiring workers to return to company facilities, many employees still work remotely at least part of the time. With technological advancements and the flexibility of working from home, remote work seems to be here to stay. Rental units that include amenities like a home office, flexible workspaces, and fast internet will have the most significant appeal to this tier of potential tenants.
Sustainability Initiatives. As the percentage of Millennial and Gen Z tenants rises, sustainability is shifting to the list of requirements rather than luxuries when finding the right rental property. Rising demand for sustainable practices, progressive builders embracing eco-friendly designs, and technological upgrades are producing a surge in energy efficiency and smart home device options that will continue to grow in the coming years.
High Demand for Rentals. Consumer confidence will likely remain shaky heading into 2025 due to factors like warfare in the Middle East and Ukraine, uncertainties about the rise of artificial intelligence, and climate change. The resulting reluctance to commit to significant purchases, compounded by elevated mortgage rates, a high cost of living, increased homeownership expenses, and a low inventory of resale homes, will sustain a strong market for landlords. Renting will remain a more affordable option for many Americans in 2025, keeping demand for rental units steady.
Growth In Certain Markets. Some areas of the U.S. see only moderate growth, while others are expanding more rapidly. Due to factors like mild climates, expanding populations, and advantageous zoning regulations, Sunbelt states are among those expected to see the fastest growth in the coming years. Many builders and landlords will focus on these sought-after markets for potential new investments in 2025 and beyond.
With high demand for rental units and exciting momentum in technology and sustainability, the rental home market should be a beneficial place for investors. Of course, different markets and rental units will have unique trends and considerations, but forward-thinking landlords across the U.S. should be well-positioned for growth and profitability in 2025.
About Rentals America
Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management, and we’re here to help landlords navigate the rental market.