The U.S. rental market is a dynamic organism, constantly influenced by factors like economic conditions, housing policies, and evolving tenant preferences. For landlords, investors, and property managers, staying ahead of these real estate market trends is crucial for maximizing returns and navigating the industry’s increasing complexities.
The Baselane team surveyed 415 U.S. rental property owners to understand their experiences, challenges, and expectations for the future. Based on these findings and existing data, we’ve identified several key trends shaping the rental market in 2025.
From rising average rent prices and regional inventory surpluses to the growing adoption of technology and the surge in demand for single-family rentals, these trends have significant financial implications for rental property owners.
Trends at a glance
- Landlords are raising rents to offset soaring operational costs: To combat rising operational costs, 85% of landlords increased rent prices in 2024, with nearly one-third raising them by 6-10%.
- Rental supply is increasing, but demand keeps prices elevated: Rental vacancy rates rose to 6.9% in Q3 2024, yet median rent for a two-bedroom still increased by 3.2% to $1,906.
- Technology promises to revolutionize property management, but affordability remains a hurdle: While technology offers solutions for streamlining property management, 35% of landlords cite cost as the biggest barrier to adopting new tools.
- The demand for single-family rentals is rising, fueled by tenant preferences and investor interest: With 31% of renters living in SFRs and rent prices up 4.4% year-over-year, investors are responding—67% of landlords own SFRs, and 32% plan to expand in 2025.
- New tenant protection laws are creating a complex legal landscape for landlords to navigate: Increased tenant protections and local regulations have created a complex landscape where 17% of landlords find compliance a significant challenge.
Rising rent prices and affordability challenges
Notable rent price increases have swept the U.S. rental market in recent years, fueled by rising demand, limited supply, and ongoing economic uncertainty.
Our survey revealed that rent increases were widespread in 2024, with 85% of landlords raising rents and 31% implementing increases of 6-10%. Landlords also revealed that 78% plan to increase rents in 2025 by a weighted average of 6.21%.
That rate is double the rise of Zillow’s observed national market rate, which increased by 3.4% to reach $1,964.80 last year. Additionally, the 2024 median rental rate represents a 32% increase over the past five years.
These rent increases are a direct consequence of the current economic landscape. Inflationary pressures, rising interest rates, and increased operating costs are squeezing landlords, forcing many to make difficult decisions to maintain profitability. This often translates to passing some of those increased expenses on to tenants.
In fact, 82% of our respondents noted that they experienced an increase in the cost of ownership of their rental properties. And 26% of them indicated their costs increased by more than 20% in 2024.
These landlords identified multiple sources of rising costs, as the survey allowed respondents to select all that applied. The most common responses include (cost category, percentage of landlords that were impacted by higher costs):
- Property taxes – 60%
- Maintenance and repair costs – 57%
- Utilities – 49%
- Insurance premiums – 43%
Rapidly increasing property values are fueling property tax hikes in many states. At the same time, average maintenance expenses for a single-family home now cost more than $10,000 a year, according to Thumbtack.
For property owners, managing these affordability challenges requires a delicate balance between maintaining profitability and retaining tenants. High tenant turnover not only increases costs but can also lead to extended vacancy periods, particularly in competitive suburban markets.
Increased supply and its financial implications
U.S. housing inventory slightly expanded in 2024, according to Census Bureau estimates of the country’s total housing inventory, contributing to a more balanced rental market.
Single-family housing starts rose by 6.5% year-over-year, while total housing completions increased by 12.4%. However, multi-family construction declined 25% compared to 2023, limiting the overall impact of the new rental supply.
As a result, national rental vacancy rates remained steady at 6.9% in the third quarter of 2024, up slightly from 6.6% in the fourth quarter of the previous year. This indicates that despite the increase in new housing units, the demand for rental properties has remained relatively consistent.
While rent growth has moderated from the peaks of recent years, prices have continued to rise in many markets. According to Zumper’s 2024 Annual Rent Report, the national median rent for a two-bedroom reached $1,906 in 2024, representing a 3.2% increase year-over-year.
This continued upward trend, even at a moderated pace, indicates that in most markets, the increase in inventory hasn’t been sufficient to create a market-wide surplus capable of driving rents down significantly.
National rental rates are being heavily influenced by persistent low supply in certain regions. As the Zumper report notes, this is particularly true in the Midwest and Northeast, where new construction has lagged behind population growth.
Cities like New York and Detroit illustrate this trend, experiencing significant rent increases due to the ongoing scarcity of available units.
Conversely, increased single-family construction in the Sun Belt and Intermountain West has led to more available rental units. Markets such as Phoenix and Austin have experienced slight rent declines as new supply has outpaced demand, forcing property owners to adjust pricing strategies.
With more rental supply entering the market, landlords in high-supply areas face increased competition and declining rents. Property owners with newly constructed buildings in these markets have had to adopt aggressive leasing strategies to fill vacancies, including rent concessions and incentives.
In markets where supply constraints persist, maintaining aging properties remains a growing financial challenge, particularly as inflation continues to drive up maintenance costs. Baselane survey data reveals that 38% of landlords cited property upkeep as one of their biggest challenges in 2024.
For landlords, the financial implications of low inventory are multifaceted. While housing scarcity supports higher rents, it also limits opportunities for portfolio expansion and increases operational costs for maintaining older properties.
Addressing these challenges requires a strategic approach, such as leveraging government incentives for property upgrades, obtaining tax abatements to lower taxes, and exploring off-market discounted deals to acquire new assets.
By analyzing local supply-demand dynamics and adjusting investment strategies accordingly, rental property owners can position themselves for sustained profitability in an evolving market.
Technological adoption in property management
From tenant screening and rent collection to maintenance scheduling and communication, software and automation tools are transforming how landlords manage their properties. This technology saves landlords countless hours by automating these tasks, allowing them to focus on more strategic aspects of their business.
According to the National Apartment Association (NAA), 93% of property managers reported adopting at least one form of technology for property management purposes within the past 18 months. The most common applications adopted in that timeframe were social media marketing (12.5%) and tenant portals generally used for online payments and maintenance requests (12.3%).
As artificial intelligence (AI) becomes increasingly critical in property management, more landlords are using it to automate workflows. A notable example is EliseAI, powering 1 in 12 multifamily units in the U.S. with AI tools for lease inquiries and renewals, scheduling AI-guided tours, resident communications, maintenance requests, and other property management tasks.
This growing adoption reflects a broader industry shift—nearly half of property management professionals report already using or planning to implement AI tools, signaling long-term momentum in technology integration beyond the 18-month window.
One key area where this shift is evident is rent collection, where automation tools streamline payments, improve cash flow reliability, and lower transaction costs.
The adoption of tech-based rent collection is now nearly on par with traditional methods. Baselane’s survey found that nearly half of landlords use person-to-person (P2P) apps to accept rent payments, and on average, landlords offer at least two payment options. With the ability to select all that apply, landlords reported using:
- 27% use online property management platforms (such as Baselane)
- 49% use P2P apps (such as Zelle, Cash App, Venmo, or Paypal)
- 45% use ACH / direct deposit
- 56% use checks
- 53% use cash
Despite the benefits, many landlords remain hesitant to adopt new technologies. Our survey showed that 35% of landlords cited the cost of implementation as their biggest barrier to adopting property management technology.
While larger property management firms can often absorb these costs, individual landlords with smaller portfolios may find them prohibitive. This divide highlights the need for affordable, scalable solutions tailored to smaller operations.
Fortunately, there are property management platforms designed with smaller landlords in mind, making it easier than ever to streamline operations without significant upfront costs. Platforms like Baselane are free to use, allowing landlords of all sizes to access real estate software and technology that streamlines their financial and property management without breaking the bank.
As technology continues to evolve, there’s potential for further innovation in property management. AI-powered tools, blockchain-based leasing systems, and mobile-first applications are just some of the emerging technologies that could redefine the industry.
Growing demand for single-family rentals
The pandemic reshaped tenant preferences. With more people seeking additional space, outdoor amenities, and a sense of community, single-family homes have become the preferred option for many renters, especially families and remote workers. This shift is particularly evident in suburban areas, where demand for SFRs has significantly outpaced urban markets in recent years.
According to the 2023 American Community Survey, 31% of all renters live in single-family homes, an increase of 3.5 million renters over the past two decades. These rental market trends have contributed to a 4.4% year-over-year increase in SFR rent prices as of Q4 2024, fueled by continued strong demand for rentals as an alternative to home buying.
This growing demand has created a wave of optimism among property investors, with 71% feeling optimistic about the rental market’s profitability in 2025 and 33% feeling very optimistic. Buoyed by this confidence, 32% of survey respondents indicated they plan to purchase two to three new properties this year.
This positive outlook is evident in investment trends. Investor purchases of single-family homes grew by 6.7% year-over-year in Q2 2024, the largest increase in two years. In contrast, purchases of multifamily properties decreased by 5%, condos/co-ops fell by 3.3%, and townhouse purchases dropped by 1.9%.
Baselane’s recent survey reflects this shift in investing strategy, with 67% of landlords identifying single-family homes as the primary type of rental property they own.
By targeting high-demand regions and incorporating sought-after amenities, property owners can maximize rental income and tenant retention. As the market continues to grow, single-family rentals remain a cornerstone of the rental housing sector, offering stability and long-term value.
Tenant protection laws and regulatory changes
Tenant protection policies and rent control measures are gaining momentum, reflecting a broader effort to address housing affordability and tenant rights.
As of 2024, at least seven states and numerous municipalities have enacted some form of rent control, with regulations varying significantly in scope and implementation.
For example, California caps annual rent increases at 5% plus inflation, while Oregon enforces a 7% limit. These policies aim to protect renters from sudden rent hikes, but they often add layers of complexity for landlords.
We found that 17% of rental property owners identified compliance with local regulations and tenant protection laws as one of their biggest challenges in 2024. These regulations are largely driven by the persistent shortage of affordable housing, a problem reaching critical levels in many urban areas.
According to the Urban Institute, zoning restrictions that favor single-family homes over multi-family units often exacerbate this issue, contributing to so-called “rental deserts” that disproportionately affect lower-income households.
In this rental market analysis, impacts include:
- Increased demand for tenant protection policies, such as rent control.
- Potential discouragement of property investment and maintenance, which could shrink the long-term rental supply.
For landlords, these regulatory changes pose significant financial challenges, such as:
- Rent control policies coupled with rising property taxes, insurance, and maintenance costs, can reduce profitability and hinder reinvestment in property improvements.
- Landlords in rent-controlled markets often face higher operating costs and less flexibility to adjust rents, which can lead to deferred maintenance and reduced housing quality.
- Complying with diverse local regulations may require landlords to invest in legal expertise, further straining their finances.
Despite these challenges, tenant protection laws have reshaped the rental market and influenced landlord-tenant dynamics. Property owners must now weigh the costs of compliance against the risks of tenant turnover and potential legal disputes or move to states with more landlord-friendly laws.
The debate over tenant protection measures is ongoing. Proponents argue that these policies are necessary to level the playing field and ensure housing stability, while opponents caution against their unintended consequences.
For landlords, staying proactive and seeking expert advice can help you navigate these challenges while maintaining profitability and tenant satisfaction.
Regional trends in the US rental market
Some small metropolitan areas across the United States experienced significant rent increases in 2024, according to the Zillow Observed Rent Index.
In a rent comparison by city, places like Oxford, MS, lead the way with a remarkable 25% growth, bringing the average rent to $2,341. Athens, OH, followed closely with a 21% increase, while Mount Pleasant, MI, and Hattiesburg, MS, saw growth rates of 17% and 16%, respectively.
| City | Average rent (as of 12/31/2024) | % change since January 2024 |
|---|---|---|
| Oxford, MS | $2,341 | 25% |
| Athens, OH | $1,101 | 21% |
| Mount Pleasant, MI | $1,008 | 17% |
| Orangeburg, SC | $1,244 | 16% |
| Hattiesburg, MS | $1,285 | 16% |
| Decatur, IL | $1,172 | 15% |
| Ozark, AL | $1,300 | 15% |
| Lock Haven, PA | $888 | 15% |
| Roswell, NM | $1,504 | 14% |
| Fond du Lac, WI | $1,022 | 13% |
Although traditionally known for their lower cost of living, these cities have become increasingly attractive markets for property investors seeking higher rental income opportunities. These trends suggest that smaller metropolitan areas, often referred to as tertiary markets, are experiencing heightened demand as renters move away from larger, costlier cities.
The relatively affordable rents at the start of the year, combined with significant growth percentages, are attractive for both domestic and international investors. Cities like Oxford, MS, and Orangeburg, SC, are emerging as potential foreign investment hotspots, where competition for single-family and multi-family rental properties has intensified.
However, differences in state-specific tenant laws play a crucial role in shaping rental markets. States with more stringent tenant protection regulations, like California and New York, often experience slower rent growth compared to the relatively unregulated Southern and Midwestern states highlighted in the table.
This regulatory environment contributes to the growing trend of landlords and property investors shifting focus to areas with fewer restrictions and higher profit potential.
Future projections for rental property management
As the rental property market continues to change, several key trends are expected to also influence the future of property management.
Shifting tenant demographics
Younger renters are prioritizing flexibility and digital connectivity. Millennials and Gen Z tenants are increasingly gravitating toward properties that offer smart home features, high-speed internet, and seamless digital rent payment systems.
Additionally, renters in these demographics place greater value on shared amenities, such as co-working spaces and social hubs, highlighting the need for property owners to adapt to changing preferences.
Sustainability
Both tenants and regulatory bodies emphasize energy-efficient and environmentally friendly properties. The demand for features like solar panels, energy-efficient appliances and lights, and improved insulation is on the rise, with renters willing to pay premiums for these upgrades.
Builders are responding, as evidenced by a steady increase in green building certifications and sustainable construction materials. This shift is supported by economic incentives, including tax credits and subsidies for energy-efficient improvements, making these investments more viable for landlords in the long term.
Financing options
In 2025, experts anticipate a potential easing of mortgage rates for property investors, combined with the growing availability of green financing programs tailored for energy-efficient upgrades.
As builder confidence shows signs of steady recovery and financing options evolve, more single-family and multifamily developments are anticipated, which could bring some relief to inventory shortages in the coming years.
Market competition
Rental property owners must also prepare for an increasingly competitive market. High interest rates, rising home prices, and economic uncertainty are likely to sustain demand for rental units, creating opportunities for landlords to maximize returns.
However, this growth comes with challenges, including adapting to stricter tenant protection laws and navigating the complexities of new financial regulations.
Looking ahead, property owners who leverage technology to gain insights, reduce costs, and save time are well-positioned to thrive. Success in this dynamic environment will require landlords to embrace innovation and adopt forward-thinking strategies that align with tenant expectations and regulatory shifts.
Your next steps for smarter rental property management
Navigating the complexities of today’s rental market requires a proactive and informed approach. By understanding rental market supply and demand and trends shaping the industry — from rising rents to evolving tenant preferences — landlords and investors can make strategic decisions that ensure long-term success.
Ready to automate your rental property management and maximize returns? Sign up for a free Baselane account today!
Methodology
The primary goal of this survey was to understand landlord and real estate investor experiences with rising costs, rent adjustments, financial preparedness, technology adoption barriers, and their outlook on the rental market’s profitability and investment opportunities in 2025.
This survey, conducted on January 14, 2025, gathered insights from 415 U.S.-based rental property owners via Centiment for Baselane. Data is unweighted and the margin of error is approximately +/-3% for the overall sample with a 95% confidence level.
