Ask the Expert
Nathan Miller, Founder of Rentec Direct
Over the past decade, the U.S. rental market has been shaped by forces beyond traditional supply and demand cycles. While the COVID-19 pandemic undoubtedly triggered a wave of disruption, current rent trends are the result of longer-term shifts driven by economic turbulence, regional population surges and evolving housing policy. As operational costs soar and affordability challenges increase for both landlords and tenants, today’s real estate investors are navigating a rental landscape that looks markedly different from what it was just five years ago.
To better understand the risks and opportunities that exist in today’s rental landscape, industry experts analyzed real rent payment data collected by landlords and property managers over the past five years, representing more than 301,000 rental properties and over 351,000 tenants nationwide. The findings offer valuable insights into how migration patterns, legislation rollout and market performance intersect, raising the following important questions that every real estate investor should be asking in 2025.
What trends stand out as most notable in this year’s rental market?
One of the most telling findings was the widespread nature of rent growth across the country. Between 2019 and 2024, the average rent paid by tenants increased in all but two states, with a national growth rate of 31%. What stood out even more was the sheer scale of rent increases in certain regions — Arizona led the nation with an 84% spike in average rent over five years. In total, 10 states experienced five-year rent growth of 50% or more, including several markets not traditionally viewed as rental hotspots, including Idaho, Montana and New Mexico.
Many of the markets on this list have historically been popular as more affordable, less densely populated alternatives to higher-cost neighbors. While coastal states like California, Florida, New Jersey and Washington continue to report the highest average rents in dollar terms, other regions are seeing notably faster rent growth, with some concentration in the Sun Belt and Mountain West. These shifts are largely driven by inbound migration, limited housing supply and fewer regulatory limits on rent growth.
For investors, the key takeaway is a reminder of just how quickly local market dynamics can shift. Staying ahead of these trends is crucial for identifying both risk and opportunity in the years to come.
How should investors interpret significant rent spikes, and how sustainable are these growth rates?
Rapid rent growth can signal opportunity, and investors in high-demand, emerging markets may experience greater profitability. However, rapid growth can also be a red flag for overheated markets approaching an affordability ceiling, where continued increases could trigger a wave of turnover and higher vacancy rates.
Investors should prioritize tenant retention strategies to minimize turnover and avoid vacancies. This is the most effective way to protect your bottom line, especially as vacancy periods can often be extended in challenging markets for renters.
It is important to look beyond potential short-term gains to understand where sustainable demand is likely to persist. Long-term population trends, job growth and projected housing supply should all be factored into any investment decision to evaluate where demand will remain stable and where risk will grow. When you factor in inflated maintenance and operating costs, higher property taxes and increasing legislation that raises the cost of being a landlord, rents are likely to continue climbing, potentially at an even faster rate than we’ve already seen.
Oregon, the only state with statewide rent control, saw a growth rate below the national average. Does this suggest rent control policies are working?
Rent control and stabilization policies intend to improve affordability, reduce displacement and promote economic diversity, but they can also limit availability, discourage new investment and development, and drive up market rents in areas without regulations. Oregon’s below-average rent growth could suggest that the statewide rent cap is easing the pressure of extreme price spikes, but the deeper question remains: Is rent control truly creating affordability, or simply slowing down the pace of rent increases?
The challenge will continue to be balancing supply and demand for both investors and tenants. Legislators need to prioritize smart housing policies that consider the long-term impact of increased regulations, rather than short-term fixes.
Oregon serves as a prime example of a state where stringent regulations and elevated operating costs have made the market less attractive for investors. For many, the cost of being a landlord — insurance, taxes, utility fees, maintenance costs, etc. — is growing at a faster rate than rent-controlled increases allow. With limited recourse to offset these expenses, many landlords are leaving the market altogether. As these landlords exit, this reduces the supply of available rental housing and can ultimately drive rent prices higher — the exact opposite of rent control’s intended effect.
Similar patterns are likely to emerge in other states pursuing more aggressive housing regulations. As 2025 progresses, investors would be wise to keep a close eye on local and state regulations in any markets they are considering to accurately assess long-term risk and profitability.
Where are the strongest opportunities for investors in 2025?
The broader U.S. housing market continues to face a persistent supply shortage, as population growth outpaces new housing construction at a rate of more than double. This imbalance has placed significant upward pressure on both home prices and rents, and often the states seeing the largest rent increases are also experiencing the most significant population growth. Especially post-pandemic, renters and homeowners alike are migrating in search of better lifestyles, lower-density population centers, tax breaks, strong job markets and greater affordability.
In 2025, some of the strongest opportunities for investors may be in secondary markets that continue to see steady inbound migration, but in areas where there is still room for housing supply to expand. Any market where land availability, job growth and cost of living remain attractive are worth close attention — keep an eye on the Midwest and Southeast. That said, climate risks and extreme weather events will continue to reshape the rental market in 2025, and investors should prioritize strategic risk management in high-risk areas.
Markets with a healthy pipeline of new construction, strong school districts and diverse employment sectors tend to attract long-term renters as they provide more stability. While national headlines can highlight broad market trends, localized rent data, population forecasts and development plans are especially important tools to validate opportunities and avoid over-saturated markets.
What should investors prioritize to stay competitive and sustainable in today’s rental market?
A 31% national rent increase over just five years highlights two very different realities: housing affordability remains a pressing concern for renters, and real estate continues to offer strong income-generating potential for investors. Landlords should expect to continue navigating rising maintenance, repair and operational costs due to inflation and supply chain disruptions, making
flexibility essential to remain competitive.
» Small but consistent rent increases are a key strategy in an era of increasing rent control legislation. Incremental annual increases help landlords keep pace with rising costs while offering tenants more predictability and stability. Transparent and advanced communication is crucial. Being upfront about the need behind rent increases often helps tenants better understand and accept the change, building trust and reducing turnover.
» Incentivizing and retaining long-term tenants should be a top priority in today’s market. High turnover and extended vacancy periods will have the biggest impact on your bottom line. Consider offering incentives like rent discounts, appliance upgrades or free amenities to encourage tenants to commit to longer lease terms.
» Housing policy, especially around rent control, is evolving rapidly, and staying informed about local laws and regulations is a non-negotiable. Familiarize yourself with the differences between rent control and rent stabilization and stay up-to-date on any policy changes in your market that impact rent prices, evictions or other tenant rights. Compliance is critical to avoid costly mistakes and maintain long-term stability.
