Which trends will 2025 hold for property management companies in the United States? We’ve done the research on the forces that will shape the property management industry and the rental market next year.
Some of the rental market trends we uncovered represent an intensification of conditions that came to the forefront during 2024. Others, however, are brand-new, and could potentially reshape the market in the year to come—such as increased interest in property acquisitions among rental owners, and an expected decrease in multifamily construction activity in the new year.
No matter what next year brings, Buildium’s research is here to prepare your business for all that’s to come—starting now, with our 14 rental market predictions for 2025.
Prediction #1: The Historic Rate of Apartment Construction Will Slow Down
In 2025, the total number of completed apartments is expected to fall by 20%, according to RealPage Analytics. Why? We’re still seeing the downstream effects of the Fed’s interest rate increases, as well as softening rent growth, cascade through the development sector. (A similar trend is expected to play out in the build-to-rent sector.)
The anticipated impact of slowing apartment construction will be slightly improved rent growth over 2024, in the neighborhood of 1 to 3% for apartment properties, so long as rental demand continues, RealPage says.
Prediction #2: Household Growth & Home Prices Will Keep Rental Demand Strong
Both single-family and multifamily rental properties have seen remarkable demand over the last few years as the populations of Americans in their prime renting years (ages 20 to 34) as well as seniors (ages 65 and older) have risen. Household formation has been strong: According to Harvard’s Joint Center for Housing Studies, 1.5 million new households were created throughout 2023—down from 2.3 million in 2022, but up from an average of 915,000 during the preceding decade.
What else is driving rental demand? The cost of purchasing a home exceeds the cost of renting by about 40%, according to PwC and the Urban Land Institute. With home prices remaining high, this calculus is not expected to change dramatically in 2025, even as mortgage rates gradually come down.
Prediction #3: Rental Affordability Challenges Will Persist Across the Country
Affordability has been a leading topic of conversation within the real estate sector for several years now, but has come to the forefront of the national discourse since the start of the pandemic. The issue comes down to supply and demand: There are too few homes at affordable prices for renters and homebuyers to choose from, pushing up prices for those that are available.
As a result, rent growth has outpaced wage growth in recent years: Between 2019 and 2023, rents rose by 28%, while wages increased by 22%, according to Harvard’s Joint Center for Housing Studies. This has resulted in a concerning reality: More than half of renters spent more than a third of their income on rent last year, including a quarter who devoted more than half of their income to housing costs.
With housing construction expected to slow in 2025, the shortage of affordable rental housing is expected to continue, causing rents to rise further.
Prediction #4: Property Managers’ Use of Tenant Screening Services Will Increase
Heading into 2025, tenant quality is property management companies’ #1 concern, according to Buildium’s most recent Industry Survey. Given the reality that rents have increased faster than wages have in recent years, it’s become more difficult to find residents whose finances will enable them to stay in the property in the long term. Companies are increasingly finding that it’s critical to adopt consistent tenant screening procedures to find the right residents for each property and avoid evictions down the line.
In addition, rental fraud is a growing area of concern: In a recent survey by the National Multifamily Housing Council, 93% of property managers and owners reported experiencing rental fraud in the last year, with the most common form being falsified proof of income or employment.
Prediction #5: Renters Will Continue Moving Less Due to Lower Renewal Rents
Buildium’s most recent Renters’ Survey found that 47% of renters were certain in their plans to stay put in their current residences between the midpoint of 2024 and mid-2025. This is the highest rate we’ve seen since 2021, indicating that the resident retention efforts many property management companies invested in over the previous year are, indeed, working.
A leading factor motivating renters to stay put is the growing gap between rents paid by current tenants and rents paid by those who are moving into a new property. The Cleveland Fed found that this gap stands at about 6%—lower than the peak of 11% that was reached earlier in the pandemic, but higher than the historical norm. This reality is expected to keep renters moving at lower rates in 2025.
In addition, it’s worth noting that people are moving less overall: The Census Bureau found that the number of renters who change residences from year to year has dropped by 9 percentage points over the past two decades.
Prediction #6: Migration to the Sun Belt Will Slow Due to Cost-of-Living Increases
The last few years have seen a remarkable increase in the number of Americans moving to high-growth Sun Belt markets like Austin, Phoenix, and Miami. However, this influx has begun to slow: The increase in demand for housing within many popular metro areas has raised prices to the point where moving no longer conveys the same boost in affordability that it once did.
Here’s where growth is (and isn’t) expected to take place in 2025, according to PwC and the Urban Land Institute.
Among markets that were seeing strong in-migration over the last few years:
- Growth is accelerating in Boise, Indianapolis, and Las Vegas
- Growth is continuing in Charlotte, Myrtle Beach, Raleigh, and Nashville
- Growth is moderating in Atlanta, Dallas, Houston, Jacksonville, and San Antonio
- Growth is barely positive in Austin and Phoenix
- Prior growth has turned negative in Orlando, Tampa, and Southwest Florida
Among markets that were seeing out-migration over the last few years:
- Growth is increasing in Minneapolis, Riverside, and Sacramento
- Out-migration is increasing in Denver and Salt Lake City
- Out-migration is slowing in Philadelphia and Portland
- Strong international migration is making up for domestic out-migration in Boston, Chicago, Los Angeles, Miami, New York City, Orange County, San Diego, San Francisco, San Jose, Seattle, and Washington D.C.
Prediction #7: The Climate is an Increasing Consideration for Renters & Owners
Natural disasters, extreme temperatures, and dangerous conditions like strong winds and poor air quality are becoming increasingly commonplace—even in locations where they’ve never reared their head before. As a result, concerns about climate vulnerabilities are motivating 1 in 7 households to look into other places to live, according to Freddie Mac—particularly renters, young adults, lower-income households, and those living in the western U.S.
Realtor.com found that 45% of homes are at severe or extreme risk of at least one climate risk—if not multiple. With popular home search tools like Zillow and Redfin now making data on these concerns readily available, renters and rental owners across the country are likely to have weather-related concerns on their mind when searching for their next property.
Prediction #8: Portfolio Growth Will Still Happen—But At a Slower Pace
For the seventh year in a row, portfolio growth is property management companies’ #1 priority, according to Buildium’s most recent Industry Survey. A full 91% of businesses plan to expand their portfolios in 2025 and 2026, in line with their growth expectations on the previous year’s survey.
What’s changed since 2023 is the pace of growth that companies expect. In comparison with past years, a larger segment of companies—and in fact, a majority—plan to expand by 25% or less.
As for how companies plan to grow: 78% of third-party property management companies will be actively recruiting new clients during the two years to come, an increase of 7 percentage points over the past year.
Prediction #9: Rental Owners’ Interest in Property Acquisitions Will Rise
Responses to Buildium’s most recent Rental Owners’ Survey showed early signs of an increase in portfolio growth expectations, with 44% of rental owners expecting to acquire new properties in the two years to come. This represents an increase of 9 percentage points since 2023, when we first identified a disparity in growth expectations between property management companies and their clients.
With interest rates expected to continue their downward trajectory in 2025, rental investors who were kept on the sidelines over the past year or two may soon be willing to reenter the market.
Prediction #10: The Ongoing Housing Shortage Will Keep Property Prices High
Though falling mortgage rates may make new property investments more affordable than they have been in recent years, prices are expected to remain high—and, in fact, to increase by 4.4%, according to Goldman Sachs. Year to date, home price growth has been strongest in the Midwest and Northeast, which haven’t received the same number of new housing units as the Sun Belt.
What’s continuing to push up already-high property prices? The pace of housing construction has fallen below what’s needed since the Great Recession, and recent years have seen an uptick in household formation, resulting in increased demand for both for-sale homes and rentals—particularly those at affordable price points. Zillow estimates that the real estate market had an estimated deficit of 4.5 million homes as of 2022, despite an influx of 1.4 million new housing units that same year.
Prediction #11: Loosened Zoning Restrictions Will Support Housing Production
Across the U.S., state and local governments are loosening restrictions to increase the amount of housing that’s able to be built. The housing shortage—which is particularly acute in coastal markets like Boston, San Francisco, and Los Angeles, according to Zillow—has forced jurisdictions to take action to counteract the legacy of single-family zoning that has been a reality in much of the country for decades.
For example, states like Oregon, Washington, and California have banned single-family zoning in certain localities, according to the Urban Land Institute. Montana, New York, Washington, and California now allow homeowners to construct accessory dwelling units on their properties, according to PwC and ULI. Other jurisdictions across the country are moving to allow lot splitting, eliminate minimum parking requirements, and spur development in areas served by mass transit.
Prediction #12: Ongoing Labor Shortages Will Keep Maintenance Wages High
Labor markets are extremely tight around the world—a trend that began during the recovery from the Great Recession, but is expected to worsen in the foreseeable future as workers age and population growth slows, according to McKinsey. When the economy is growing, more jobs are created, resulting in greater demand for workers.
However, because a growing economy also results in more infrastructure and housing construction projects—and because many workers with physical and manual skill sets are nearing retirement—competition for maintenance and repair workers is tight, putting upward pressure on wages. This trend is expected to continue for the foreseeable future.
Prediction #13: Usage of AI Tools Will Increase for Communications & Marketing
In a relationship-focused industry like real estate, technology is best viewed as a supplement to human staff rather than a replacement. Tools like artificial intelligence are enabling property management team members to spend less time on repetitive processes and more time on building connections with customers and adding value through their specialized expertise. As a result, the creation and adoption of AI tools is certain to grow in 2025.
Where are AI tools having the biggest impact? PwC and the Urban Land Institute describe how real estate professionals are using new technologies for property marketing (such as creating listings and conducting virtual walk-throughs), chatbots (for communication and scheduling), and market analysis. AI solutions are helping to streamline rental processes like the creation of SEO-optimized marketing descriptions, according to Multi-Housing News; and when it comes to maintenance, certain tools are able to discern where property repairs are needed and enable responses outside of standard business hours.
Prediction #14: Companies Will Increase Their Emphasis on the Resident Experience
2024 has seen several proptech companies launch new solutions to enhance the resident experience—for example, RealPage’s launch of LOFT, a platform that covers the full lifecycle of a resident’s time in a rental property, from applying for a unit to paying their rent and receiving rewards.
88% of renters would like to complete at least some rental processes online, a 17-point increase since 2021, according to Buildium’s most recent Renters’ Survey. This includes a majority of all 5 living generations, ranging from 61% of Silent Generation renters all the way up to 94% of Generation Z and Millennial renters. As a result, in 2025, we expect to see even more companies launch new technologies to increase resident satisfaction and loyalty within their properties.
The 2025 State of the Property Management Industry Report
Want to learn more about the challenges and opportunities that property management companies will face in 2025? Check out our recently-released Property Management Industry Report. Every year, Buildium surveys thousands of property management professionals, renters, and rental owners to give companies a 360-degree view of the industry. Download your free copy of the report now.
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