In 2024, the real estate industry saw interest rates drop to a little less than 6%. We also saw the following trends for landlords: more renter negotiation power, flexible rental trends, and the implementation of AI technology. To get landlords prepared for the near year, here are five 2025 trends to look out for.
Rise of Renters
Home prices are expected to rise in 2025 to 4.5%. This has made it extremely difficult for many younger generations to buy a house, which means people are turning to renting. In 2025, many Americans will remain renters or become renters, meaning that landlords will have more opportunities to rent out their properties to potential tenants. Plus, build-to-rent communities are becoming more popular among families and individuals.
The Lasting Effects of Inflation & Interest Rates
Interest rates and inflation will make or break any real estate investment. When interest rates rise, it costs more to borrow money, which makes purchases more expensive, and slows down the economy, hurting the property market. One major way to combat inflation is through raising rent prices.
While mortgage rates are hard to predict, experts agree that the rates will fall steadily in 2025. It’s important to stay updated on interest rates and inflation as we head into 2025, as it will help you make smarter decisions about your rental property.
Green Buildings Becoming More Popular
Sustainability is becoming more popular for all kinds of renters. People are looking for eco-friendly buildings that use less energy and have a lower environmental impact. With the introduction of green buildings, carbon emissions can be reduced and also help save money on energy bills.
Flexible Rental Trends
Landlords are still coming across renters who want flexible leases that allow them to move into a rental space for less than a year. These include month-to-month leases, school-year leases, summer leases, and more.
Because of summer and school schedules, destination markets will increase for short-term rentals. As a landlord, you will need to determine whether you will allow flexible short-term leases. These kinds of leases can offer landlords flexibility and freedom and also allow for higher prices. Decide whether offering flexible rentals is a good choice for you.
AI Technology
AI Technology continues to change how industries operate and will continue to change the landscape of renting. AI now automates tasks like tenant screening, rent collection, and scheduling, which helps save time. Also, the addition of AI chatbots like ChatGPT and virtual assistants makes the communication process faster and easier. At Thayer & Associates, we offer our secure online system that lets tenants pay their rent hassle-free.
Upcoming trends are set to change the course of the rental market in 2025 for renters. How will you manage the changing landscape?