might choose to convert their listings to long-term rentals, as demand in this segment is higher, which could help you expand this area of your rental business. 4. MULTIFAMILY VS. SINGLE-FAMILY RENTALS. Multifamily and single-family rentals have unique characteristics and investment profiles. Their cap rates may differ, but both may have low risk depending on their location and condition. Multifamily will increase operating income but require more maintenance, repairs, and management oversight. Look at the specific demand trend in your region by property type and availability when considering where to invest your own dollars or make suggestions to clients. ECONOMIC AND POLICY FACTORS Economic and policy factors influence the rental market and its stability. Interest rates remain high in 2025, which means mortgages are still out of reach for many people and keep them renting. Houses available to buy fluctuate and are location-specific, with new builds still moving forward. However, the evolving story of tariffs will affect this, as many materials are not widely available domestically. Inflation, wage growth, and employment rates also affect the affordability factor. Rent control laws and tenant protections also fall under this category. This typically happens locally, with regulations in place to cap rent increases. Laws that protect tenants outside of national laws, like the Fair Housing Act, may determine how you screen tenants,
promotions and messaging about moving from the city to the suburbs. 2. RISING RENT PRICES AND AFFORDABILITY. Rental prices have been rising steadily since 2020. The latest data shows a 3.5% increase from February 2024 to February 2025, with the current average being $1,980. This dataset has positive news: The growth is slightly below pre-pandemic averages; however, it is still 33.9% higher than they were before. There are more influences over pricing than demand and availability, which gets to the root of what a consumer considers affordable. Inflation, which had decreased in 2024, is back on the rise. Consumer confidence fell in the first quarter of 2025. Demand takes a hit if those in the market simply can’t afford the rent. If this is the picture in your region, you can look for signs of market predictability, but that may be challenging in a volatile economy. You can look at the data from your properties’ rent history and what potential tenants are saying about their budget. If the gap is too wide, it may be time to apply creative pricing strategies to avoid longer vacancies. 3. SHORT-TERM VS. LONG-TERM RENTALS. Some markets are filling the availability gap with short-term rentals from platforms like Airbnb. These tend to be much more expensive and have restrictive rules for guests. Some renters may need to use it as a solution for their initial move while they decide where they want to put down roots. Short-term rentals are increasingly subject to regulatory challenges and may be oversaturated in certain locations. One possible result is that property owners
estimated the savings to be around 11% across the country. It can be even greater when comparing high-cost cities. In this trend, there is some market predictability to add to your playbook. If you have rentals in suburban areas with an uptick in new residents exiting the city, you can count on continued demand. However, this may lead to an increase rental rates, depending on availability. It also helps you define specific groups to market to, creating inspiring
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