If you’ve been following the housing market lately, you know the tides are shifting—and quickly. With mortgage rates hovering around 7% and home prices still historically high, more people are choosing to rent instead of buy. In fact, according to new data highlighted by Barron’s, 35% of consumers now prefer renting over owning a home.
At the same time, there’s a significant slowdown in new apartment construction. The number of apartment completions has dropped by 28% since last summer, tightening supply just as demand surges. As a result, rents are climbing at a pace of 5–10% annually in many markets.
So what does this mean for you as a real estate investor? Let’s break it down.
Why Rents Are Rising—and Likely to Keep Climbing
“The apartment glut that weighed on rents last year is rapidly coming to an end… with demand rising, rents are headed up, too.”
— Barron’s
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Here’s a closer look at the key drivers:
- Higher borrowing costs: Mortgage rates have stabilized but remain elevated. For many would-be buyers, the math simply doesn’t work out. Renting becomes the safer, more affordable option.
- Shrinking new supply: Developers have pulled back amid higher construction costs and tighter lending standards. This means fewer new rental units hitting the market.
- Pent-up demand: Millennials and Gen Z continue to form new households, adding fresh demand for rentals. With homeownership out of reach for many, rental markets absorb this wave.
Taken together, these factors create a powerful tailwind for rental property owners. If you own (or plan to own) rental real estate, these trends are working in your favor.
How You Can Position Yourself to Benefit
You don’t need to be a giant institutional investor to take advantage of these market conditions. Here are practical ways you can tap into the growing rental demand:
- Focus on turnkey or rent-ready properties.
With fixer-uppers losing some of their shine due to high renovation costs, turnkey rentals offer a faster path to cash flow. Properties that are move-in ready can capture rising rents immediately. - Look in markets with strong employment and population growth.
While national rent trends are positive, local fundamentals matter most. Cities with diversified economies and net in-migration are more likely to see sustained rental growth. - Explore financing that supports buy-and-hold.
Debt-service coverage ratio (DSCR) loans or portfolio loans are designed with rental investors in mind, focusing on the property’s income potential rather than solely your personal income. - Invest in property management.
With more renters competing for fewer units, keeping your property well-maintained and your tenants happy can justify above-average rent increases.
Why Now Is Still a Smart Time to Act
It’s natural to feel cautious with so much economic uncertainty. But here’s the encouraging part: rising rents can help offset higher borrowing costs. As rental income grows, so does your property’s value and your long-term equity position.
“Even with interest rates still elevated, landlords have the wind at their backs, with supply tightening and tenants willing to pay more.”
— Barron’s
Final Thoughts: Your Next Move
If you’ve been waiting on the sidelines, now is the time to sharpen your strategy. Research markets, run your numbers, and consider how you can add rental assets to your portfolio—or optimize the ones you already have.
The current market conditions aren’t just a challenge—they’re an opportunity. With rents projected to continue rising and supply constraints persisting, well-positioned rental investments could offer both steady income and long-term growth.
Remember: building wealth through real estate takes planning, diligence, and a willingness to act. But with the right moves, the rewards are well worth the work.
✅ Want more guidance on rental investing in today’s market?
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