How Will The Rental Market Change This Year? Predictions By The Experts
Whether you manage property or are renting and wondering what 2025 might hold for you—or are looking to rent for the first time—here are some expert predictions about how the rental market may change this year.
If You're Looking To Rent, Rent Now
If you're still deciding whether or not 2025 is the year to try renting a place—it is. New apartments will not be built at the same rate, regardless of where you live. Rental experts predict apartment construction will slow down by as much as 20% from 2024. If you've spotted a new apartment building slated for completion or accepting applications, now is the best time to put your name in.
Renting Will Continue To Be Cheaper Than Buying
New data suggests that renting is 40% cheaper than buying a home. With housing prices expected to rise by 4.4% in 2025, new renters may see rental increases, but it won't affect the overall trend of renting being cheaper than purchasing a home. Of course, if getting out of the rental market is your goal for 2025, it may be worth looking at buying options early in the year before the price of homes increases.
But It's Still Not "Affordable"
While renting will continue to be cheaper than buying in 2025, Harvard's Joint Center For Housing Studies has charted a 28% increase in rental costs from 2019 to 2023. That number isn't predicted to stabilize or go down anytime soon. Wages haven't kept up with the cost of renting—only increasing by 22% during the same period—thus, renting isn't "affordable" for everyone.
Renters Still Spending More Money On Renting
Some renters have been left with the short straw—many spend more than a third of their income on rent, with some spending more than half of their income. Unfortunately, that's not predicted to change in 2025.
For Property Managers, Tenant Quality Will Be Front & Center
Of course, it's only natural that you, as a property manager or landlord, will want to vet the tenants who rent your apartments. Ensuring that you're getting quality tenants—responsible, quiet people who pay their rent on time and don't cause you issues—will continue to be among the most important priorities for landlords.
Rental Fraud Is A Huge Problem
Rental fraud has become a huge problem in recent years, and 2025 will likely be no different. The Multi-Family Housing Council conducted a survey indicating that 93% of landlords were victims of rental fraud, mostly involving falsifying employment records or proof of income statements.
Resident Retention Efforts Are Working
If you're not looking for a new space to rent in 2025, you'll be one of 47% of renters staying put. Landlords and property managers are spending money to beautify their spaces, upgrade heating systems, or make other property investments to improve the lives of current tenants. As the numbers indicate, these resident retention investments work nationwide for landlords and property managers.
Residents Won't Be Moving Into New Units From Old Units
As landlords build new apartment buildings, it's unlikely that residents living in their old units will want to jump ship to the newer unit. This is due to the increased cost. If you're renting a unit for $1,000 and a new one is built but starts at $1,500 for the same size of the apartment—why would you want to spend the extra $500? Census Bureau data indicates that residents are moving from unit to unit at a lower rate—a 9% decrease in the last two decades.
2025 Won't Be The Year Of Mass Migration To The Midwest
While "the Sun Belt"—cities like Austin, Arizona, and Miami—has appealed to Americans over the last several years, 2025's rental markets are peaking elsewhere. So, if you live in those and are frustrated by newcomers from the East, then you're in luck in 2025!
Daydreamer Creative Studios, Pexels
In-Migration Is Increasing In These American Cities
In-migration, people moving to the following American cities, will increase or remain a net positive in 2025: Boise, Indianapolis, Las Vegas, Charlotte, Myrtle Beach, Raleigh, and Nashville. These cities have seen new residents over the last few years, which has, unfortunately, driven down the availability of rentals.
While People Are Leaving These American Cities
Suppose you're looking to become a resident of the following American cities. In that case, you may notice price decreases as landlords and property managers try to retain their current tenants, as many are leaving the following places: Minneapolis, Riverside, Sacramento, Denver, and Salt Lake City.
Chris, CC BY-SA 2.0, Wikimedia Commons
International In Migration Is Increasing In Many American Cities
While out-migration occurs in some cities, many American cities experience international migration to compensate for those leaving. Cities like Boston, Los Angeles, Chicago, Miami, NYC, San Diego, San Francisco, and Washington, DC, are all seeing an increase in international migration to compensate for Americans moving out.
John Picken, CC BY 2.0, Wikimedia Commons
Climate Change Will Continue To Affect Renters & Landlords Alike
Suppose you already rent in an area considered high-risk for climate catastrophe, like Tornado Alley or one of the southern coastal areas that get hit by hurricanes. In that case, climate change is likely a core consideration. If you're looking at moving to one of these areas for work and need to rent, remember that landlords are also concerned about climate change affecting their properties.
More American Properties Will Be At Risk Of Climate Catastrophe This Year
With 45% of homes at risk from climate change last year, rental search tools like Redfin or Zillow make climate change risk a part of their available data. If 2024's weather event pattern was anything to go by, and the extreme wildfires that already damaged a significant portion of LA in the wet season, 2025 weather will continue to put properties at risk.
Nserrano, CC BY-SA 3.0, Wikimedia Commons
For Landlords, Portfolio Growth Is Expected To Slow
You may be in luck if you're a landlord looking to buy a property this year, or if you're not a landlord yet but want to become one. Other landlords in your area likely won't be buying property at the same rate, even though 91% of landlords expect to expand their portfolios in 2025 and 2026.
Interest Rates Will Continue To Drop
If you're a property investor, news that interest rates will continue declining in 2025 should be music to your ears. 2025 might be the time to re-enter the market if you've spent the last two years waiting for interest rates to drop to an acceptable level.
The Housing Shortage Will Still Exist
Less of a prediction, more of a certainty, this one. In 2022, Zillow posited that there was a housing shortage of 4.5 million homes compared to the need. This has certainly not let up in the past three years, and the housing shortage will keep property prices high. Not great if you're looking to buy.
Loosened Zoning Restrictions Set To Continue In 2025
States like Oregon, California, and Washington banned single-family zoning in certain areas to encourage property developers to build multi-person/multi-family units. California also loosened its zoning laws to allow for an "accessory dwelling" to be built on a property. New York, Montana, and Washington followed suit. This loosening of zoning restrictions to encourage the development of apartment buildings and multi-family duplexes will continue in 2025.
Spicypepper999, Wikimedia Commons
Labor Shortages Will Persist
One of the myriad challenges facing new developers in 2025 is labor shortages. According to the Chamber of Commerce, as many as 1.7 million workers are missing from the workforce compared to February 2020. These labor shortages affect multiple industries crucial to home-building, leaving many projects with uncertain futures or expensive delays.
Marketing And Communications In The Rental Market Will Use AI
Like most other industries in the US, landlords and property managers will use artificial intelligence in their communications and marketing. Whether creating listings, conducting virtual walkthroughs of spaces for clients, using chatbots for scheduling, or conducting market analysis, AI allows landlords and property managers to spend more time with clients or building new spaces rather than performing repetitive tasks.
The Rental Experience Will Be Top Priority For Landlords
Remember when you rented your first apartment? How was the experience? From meeting the landlord to filling out the application and the viewing, did you feel good about it? Nowadays, those "good vibes" are essential for landlords and property managers, so they're putting a lot of effort into making a good first impression. For example, 88% of renters would like to complete at least some portion of the pre-rental process online, up from 71% in 2021.
The Best Cities In America For Renters
If you're looking for a rental in 2025, here are the top five cities you could rent.
Bernard Gagnon, CC BY-SA 3.0, Wikimedia Commons
Charleston, SC
Charleston, South Carolina, was 2024's best city for renters for the second year. It is known as the tech hub of the South and is nicknamed "Silicon Harbor". In addition to job prospects at some of America's biggest companies, the tourism industry is booming, providing even more work opportunities. The cost of living is below the national average, and the city generally offers a fantastic quality of life.
Chris Pruitt, CC BY-SA 3.0, Wikimedia Commons
Atlanta, GA
Atlanta is next on our list of the top five. Although it is more of a city for career-driven people, its cost of living is 1.4% less than the national average. The average apartment in Atlanta is 972 square feet. Spacious and cheap? A winning combination.
Paul Brennan, Wikimedia Commons
Sarasota, FL
The Floridian city of Sarasota is next on our list because it offers a high work-life balance. Nationally, Sarasota ranks fifth in the cost of living and housing and sixth in the local economy. It's a small city that keeps itself afloat, perfect for industrious young career professionals looking for a high quality of life.
Suncoast Aerials, Shutterstock
McKinney, TX
You wouldn't have expected to see McKinney, TX, on our list, would you? Well, it's here because of its low cost of living and high quality of life. With a small-town feel that embraces you as you enter, McKinney is perfect for those looking to escape the major Texan cities without sacrificing too many amenities.
Rick Ray, CC BY 2.0, Wikimedia Commons
Scottsdale, AZ
Scottsdale, Arizona, was the "most promising Western town" in last year's rental rankings—coming in at #2—mostly thanks to its lively cultural scene and promising job prospects, including the HQs of GoDaddy web hosting, Voya Financial, and Nationwide Insurance. No matter your industry, you'll find work (and affordability) in Scottsdale.
Flyer84, CC BY-SA 3.0, Wikimedia Commons
Where Are The Most Expensive Cities For Renters In The US?
You should avoid living in these American cities if you're on a thin rental budget. They have the highest rents in the country for a metro area.
Vadim Manuylov, CC BY-SA 3.0, Wikimedia Commons
Santa Clara, San Jose, & Sunnyvale, California
Rents in San Jose, Santa Clara, and Sunnyvale, California, are an incredible $3,811 per month. That's $600 higher than in San Diego, Chula Vista, and Carlsbad, where rent is just $3,228 per month.
Will Buckner, CC BY 2.0, Wikimedia Commons
Where Are The Cheapest Cities For Renters In The US?
In terms of the cheap seats for those looking to rent in a metro area, you have Cleveland, Ohio, where the average rent is $1,288 per month. That's followed by Buffalo, New York, where the average rent is $1,294 per month.
Erik Drost, CC BY 2.0, Wikimedia Commons
A Final Word On Rentals And Renting In 2025
If you're serious about getting into the rental market as a developer this year, then now might be the best time to invest or start your building process before property prices increase by 4.4%. Or, if you're a renter looking for a new place to rent, you may want to stay put. Or, if you're renting your first apartment, prepare to encounter artificial intelligence and an increase in rental prices (with a lack of availability) as the year goes on. It's tough out there—we get it. Whether renting or owning a rental is your goal, 2025 is the best year to execute those goals.
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