{"id":181402,"date":"2025-03-03T16:19:35","date_gmt":"2025-03-03T23:19:35","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=181402"},"modified":"2025-03-03T16:19:41","modified_gmt":"2025-03-03T23:19:41","slug":"wsj-says-we-are-entering-a-landlord-friendly-era","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/wsj-says-we-are-entering-a-landlord-friendly-era","title":{"rendered":"Have We Entered a “Landlord-Friendly” Era?"},"content":{"rendered":"\n

According to the<\/span> Wall Street Journal<\/span><\/a><\/em>, landlords have a reason to rejoice: A \u201clandlord-friendly era\u201d of real estate is about to unfold.<\/span><\/p>\n\n\n\n

The<\/span> high cost of mortgage rates<\/span><\/a> and homeownership doesn\u2019t look like it will <\/span>abate any time soon<\/span>. With the new construction pipeline drained by the end of the year, landlords can expect to see rental prices increase nationwide as 2025 progresses.<\/span> <\/span><\/p>\n\n\n\n

\u201cThe relationship is going <\/span>to very quickly flip from a renter-friendly environment to a landlord-friendly environment<\/span>,\u201d Lee Everett, head of research and strategy at multifamily giant Cortland, told the <\/span>Wall Street Journal<\/span><\/em>. <\/span><\/p>\n\n\n\n

Compounding the issue is stubborn inflation, which is likely to cause the Federal Reserve to hit pause on any rate cuts.  \u201cIt will be <\/span>very hard<\/span> for the headline inflation number to reach the Fed\u2019s 2% goal without a slowdown in housing costs,\u201d Lisa Sturtevant, chief economist at Bright MLS, told the <\/span>Journal<\/span><\/em>.<\/span><\/p>\n\n\n\n

Rents have steadily been climbing in the Midwest, Northeast, and parts of the West Coast\u2014where construction has been considerably less than in the Sunbelt. According to real estate analytics data and analytics giant<\/span> CoStar<\/span><\/a>, landlords can expect <\/span>multifamily<\/span><\/a> rents to show \u201cmeaningful growth\u201d in the second half of 2025 as demand overtakes supply. <\/span><\/p>\n\n\n\n

Construction Costs Could See Rents Increase<\/span><\/h2>\n\n\n\n

One <\/span>of the<\/span> big unknowns about the Trump presidency is how much construction costs are likely to increase should tariffs persist and migrant deportations continue. According to the<\/span> National Association of Home Builders<\/span><\/a>, the U.S. imports about 70% of its building materials from Canada and Mexico. Additionally,<\/span> undocumented labor<\/span><\/a> contributes about 13% of the construction workforce.<\/span><\/p>\n\n\n\n

As construction declines in the South, demand for rentals has been increasing, with the multifamily vacancy rate now below its long-term average for the first time in about two years, according to the <\/span>Journal<\/span><\/em>. <\/span>The overall pattern points to a multifamily wave of increasing rents, <\/span>which explains<\/span> why real estate investment trusts (<\/span>REITs<\/span><\/a>) have been buying <\/span>up<\/span> Sunbelt multifamilies.<\/span> <\/span><\/p>\n\n\n\n

\u201cWe assume that the second half of 2025 [into] 2026 will be back to rent growth,\u201d Gaia CEO Danny Fishman, who has recently overseen the purchase of three Sunbelt properties for his REIT, told the <\/span>Journal<\/span><\/em>.  \u201cWe are playing the wave.\u201d<\/span><\/p>\n\n\n\n

Democratic government officials are less enthusiastic about increasing rent prices, which is exacerbating a housing market mired in an affordability crisis.<\/span><\/p>\n\n\n\n

\u201cThis is chaos on steroids,\u201d Virginia Democratic Senator Mark Warner said. \u201cThe problem is that from the rental market side, I fear those folks <\/span>are going to<\/span> bear the biggest burden.\u201d<\/span><\/p>\n\n\n\n

Markets With the Greatest Rent Increases<\/span><\/h2>\n\n\n\n

A <\/span>review of HUD data<\/span><\/a> from constructioncoverage.com highlighted parts of the country where rent is rising fastest. While median rents for 2025 <\/span>are expected<\/span> to be 4.8% higher nationally than in 2024, the Mountain West, specifically Montana, and Idaho, lead the nation, where rents <\/span>are projected<\/span> to be over 20% higher year over year, more than four times the national average.<\/span><\/p>\n\n\n\n

Virginia (11.6%), Tennessee (10.7%), and Hawaii (9.2%) also show far higher-than-average rent increases. However, on a metropolitan level, one city stands out above all others\u2014<\/span>Bozeman, Montana<\/span><\/a>\u2014where rents <\/span>are forecast<\/span> to be 37.4% higher in 2025 than the year before. <\/span>Boise City, Idaho<\/span><\/a>, is not far behind, with a 32.1% increase.<\/span><\/p>\n\n\n\n

Drilling down on the reasons for the rent spikes in these areas, the local<\/span> Daily Montanan<\/span><\/a> <\/em>revealed that the Bozeman market is essentially frozen, with 80% of mortgage holders in the state having rates that are 2% to 3% below the current mortgage rates and thus unwilling to move and increase inventory. <\/span><\/p>\n\n\n\n

A lack of new housing and an influx of residents from neighboring states has led to a wildly unaffordable real estate market. From 2010 to 2020, there was 9.6% population growth against 6.6% housing growth. Montana lagged <\/span>behind<\/span> as surrounding states saw a burst of homebuilding after the pandemic. <\/span>With a 14,000 housing unit gap, it would take three years of constant building at Montana\u2019s current rate <\/span>just<\/span> to meet the existing demand\u2014not factoring in the increasing demand of new residents.<\/span><\/p>\n\n\n\n

Rents Overall Will Show Steady Increases<\/span><\/h2>\n\n\n\n

Using RealPage data,<\/span> CRE Daily<\/span><\/a><\/em> provided further insights into the expected state of the rental market in 2025. Here are the key takeaways:<\/span><\/p>\n\n\n\n

 <\/p>\n\n\n\n