As we head into 2025, it’s a good time to take stock of where the rental market is heading and what it means for investment properties. There’s encouraging news on the horizon, but also some financial trends worth watching closely.
Here’s what we’re seeing–both in our local market and across the country:
The Good News: Rent and Renter Demand Continue to Rise Modestly
Demand for rentals remains strong, and moderate rent increases are expected to continue through 2025. While the extreme, fast-paced growth of previous years has leveled off, the market is starting to near equilibrium. For now, this trend still favors property owners, with demand consistently outpacing new supply in many areas, but further balance is on the horizon.
The Bad News: Operating Costs Are Increasing Faster Than Rents
Despite the steady increase in rental income, several key expenses are increasing at a much faster pace. This shift is affecting owners nationwide, regardless of location or portfolio size.
Property Insurance: In almost every U.S. market, property insurance premiums are rising dramatically – often between 30% and 50% year-over-year. This is a national trend driven by market-wide risks rather than factors specific to individual policies or providers.
Property Taxes: Assessed values are climbing, and tax rates are following. Many owners are seeing property tax increases of 10% to 25%, outpacing rental income growth.
HOA Dues: For properties within an HOA, expect significant increases in dues. HOAs are experiencing higher insurance premiums and maintenance costs, and those expenses are being passed on to members.
Maintenance & Repairs: From plumbing to HVAC to appliance replacement, maintenance costs have risen sharply. Repair costs are often 30–40% higher than they were just a few years ago, with capital improvements seeing even greater increases.
What This Means for Property Owners
While rental income is on the rise, net profitability may feel tighter due to the increase in operational costs. This doesn’t necessarily signal poor performance—it reflects today’s market dynamics.
At Deca Property Management, we’re here to help navigate these changes. Our focus is on maximizing returns while keeping owners informed and prepared for what’s ahead. Being knowledgeable of the trends—and adjusting expectations accordingly—is key to long-term success in the evolving rental landscape.
