The State of Property Management: Trends & Insights for 2025
The real estate market continues to shift, and while many anticipated relief in mortgage rates, they remain stubbornly high. As of now, rates hover just below 7%, falling short of the expectations many had for a significant drop. At the same time, home prices are still climbing, with JP Morgan predicting a 2-3% increase this year. Though slower than in 2024, this continued appreciation keeps affordability a pressing concern, particularly as the nation still faces a significant housing shortage.
For buyers, high mortgage rates and limited inventory make purchasing a home increasingly challenging. Meanwhile, renters are feeling the squeeze as demand for rental properties surges. Economic policy changes, such as the administration’s recent tariffs on major trade partners, are further complicating the market. Increased costs for building materials, including lumber, gypsum, and steel, will likely have a ripple effect on housing affordability and availability.
Key Market Trends to Watch
Mortgage & Rental Market Snapshot
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6.89% – Average 30-Year Fixed Mortgage Rate
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2.9% – Inflation Rate
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2.0% – Target Inflation Rate
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3.4% – Average Rent Increase in December 2024
According to the Rental Housing Journal, rent prices rebounded last year, driven by strong job growth and fewer home sales. Net absorption—the total number of rented units—grew by over 400,000 units in 2024, one of the highest recorded increases. This trend is expected to continue in 2025, creating new opportunities for investors and landlords alike.
What’s Driving Rent Growth?
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Increased Home Values – Inflation and appreciation are pushing home prices higher, keeping more potential buyers in the rental market.
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Low Inventory – Sluggish new construction and reduced sales are limiting available housing.
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Barriers to Homeownership – Economic constraints are preventing many from making the jump to homeownership.
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Rising Ownership Costs – Maintenance, insurance, and property taxes are making homeownership more expensive.
With lower supply and heightened demand, rental prices are expected to rise steadily throughout 2025, making real estate investment an increasingly attractive option.
The Investment Landscape: Is Now the Time to Buy?
The outlook for 2025 is the most optimistic since early 2022. According to JLL’s Global Real Estate Outlook, both commercial and residential investment values are projected to increase. Multifamily rents are expected to grow by 2.0-2.5%, correlating closely with the single-family rental market. The supply shortage in new developments—highlighted by Freddie Mac’s projections—suggests landlords of well-located rental properties will see rising demand.
What This Means for Landlords:
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Higher Tenant Retention – Limited new housing options mean more tenants may choose to renew leases.
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Rental Rate Increases – Strong demand allows landlords to justify rent hikes or property upgrades.
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A Competitive Advantage Through Upgrades – Investing in modern amenities, sustainability features, or minor property improvements can significantly enhance desirability and occupancy rates.
Market Challenges: Tariffs, Insurance, and Climate Impacts
Rising Tariffs on Building Materials
New tariffs could lead to sharp cost increases for critical building materials. US News reports that a 25% tariff on foreign building products could drive construction costs even higher, directly impacting multifamily development. Notably:
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Lumber tariffs from Canada could rise from 14.5% to 40%, potentially tripling costs.
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Steel tariffs could add up to $4 billion in additional expenses, significantly affecting multifamily housing projects.
Wildfires & Their Impact on Rental Markets
Recent wildfires in California have further strained rental markets. Following the Eaton and Palisade fires—ranked as two of the most destructive in the state's history—rental demand surged. Online rental searches rose by 37% year-over-year, and bidding wars erupted. In one case, a $16,000/month rental was bid up to $30,000/month for a two-year lease. Meanwhile, insurance costs have skyrocketed, with major providers pulling out of high-risk areas, leaving landlords with limited options.
Smart Insurance Strategies for Property Owners
With rising insurance costs, landlords should consider reevaluating their coverage and exploring tax incentives to offset expenses. The Inflation Reduction Act provides tax credits for property upgrades that enhance energy efficiency, helping property owners lower long-term costs while staying competitive.
What’s Next for Property Owners & Investors?
The road ahead presents both challenges and opportunities for investors, landlords, and buyers. As the market adapts to economic shifts, strategic investments, careful planning, and proactive property management will be key to maximizing returns.
At Corken + Company, we specialize in real estate solutions that adapt to the evolving market. Whether you're looking to buy, sell, or lease, our expert team is here to provide guidance and strategies tailored to your needs.
📞 Contact us today at 303-858-8003 or visit www.corken.co to explore how we can help navigate the ever-changing real estate landscape.
