Michael Lucarelli is CEO and cofounder of RentSpree, writing about real estate business. RentSpree is reimagining how people rent homes.
As we approach 2025, the U.S. real estate market is filled with contradictions that create both challenges and opportunities. It’s crucial to understand these dynamics and develop strategies to work with and ultimately take advantage of.
Below are the top contradictions I see shaping the market, along with what business leaders can do in response.
1. Rentals are everywhere, but homeownership remains the gold standard.
With around 34% of U.S. households renting, according to a report from the Harvard Joint Center for Housing Studies, renting has become an increasingly common choice. For some, it’s the only feasible option due to high home prices, while others choose it for the flexibility it offers in an increasingly remote-work-driven world. Yet, the aspiration for homeownership remains strong, as it’s still seen by many as the chief key path to wealth accumulation and financial security.
Takeaway for leaders: Serve both renters and buyers.
Renting and homeownership shouldn’t be viewed as mutually exclusive options. When working with renters, it’s important to highlight the benefits of flexibility and help them strategically use renting as part of a long-term wealth plan.
Property management firms can capitalize on the growing trend of long-term renting by offering premium services tailored to lifestyle renters, such as smart home technologies and co-working spaces. While supporting current renters, it’s also important to help move them toward future success should they choose to want to buy down the line. Tools and strategies such as sharing budgeting advice and credit-building hacks can help them transition from renters to owners when the time is right. Businesses should focus on being a valuable partner in people’s financial journeys.
2. Renting is often not seen as smart financially, yet it can foster affluence.
Traditionally, renting is seen as a poor financial choice because it doesn’t build equity. However, renting can provide financial freedom by avoiding the high upfront and ongoing costs of homeownership. On average, homeowners spend more than $18,000 per year on costs like property taxes, maintenance and utilities. Renting allows people to save money, potentially pursue better job opportunities anywhere and invest elsewhere.
Takeaway for leaders: Position renting as a wealth strategy.
Many renters are unaware of the financial advantages renting can offer, such as avoiding down payments and unexpected repair costs. If your business serves renters, educate them on how renting can be a savvy choice, freeing up capital for other investments or savings.
Providing tools to help renters make informed financial decisions about their housing options help position renting as part of a broader wealth-building plan. These resources could include first-time homebuyer education programs, including credit-building strategies, saving for a down payment, and understanding mortgage options. Also, you may want to consider partnering with financial advisors or apps that help renters develop a long-term wealth plan.
3. Housing demand is high in some areas while others struggle to sell.
While news headlines often speak in national terms of the state of U.S. real estate, the market is increasingly regional. In high-demand areas like California, New Jersey and Washington, inventory is low and competition is fierce, pushing prices higher—California’s median home price was $886,560 as of July, up 6.5% from the previous year.
In contrast, states like Florida are struggling due to rising insurance costs from natural disasters, leading to stagnant sales. Florida’s homeowners insurance premiums surged 45% between 2017 and 2022, according to a recent report, causing many buyers to think twice about purchasing.
Takeaway for leaders: Tailor strategies to local markets.
Regional differences are growing more pronounced, so a one-size-fits-all approach won’t work. In hot markets where competition is fierce, prioritize educating buyers on how to navigate multiple-offer situations such as through pre-approval assistance, guide buyers through strategic bidding techniques, such as escalation clauses, which allows a homebuyer to up their offer if the seller receives a higher competing bid. This can help increase their chances of success without overextending financially.
Also, provide real-time market data, to help clients make informed decisions on timing and offer amounts. In slower markets, focus on insurance consultation, such as offering partnerships with insurance brokers, and conduct regular pricing evaluations to reflect market conditions. In regions where selling is difficult, help homeowners explore renting out their property as an alternative.
4. It’s a seller’s market—but selling is far from easy.
Even in high-demand areas, selling isn’t as straightforward as it may seem. While homes are still getting multiple offers in high-demand markets due to limited inventory, the number of bidding wars is down, and fewer homes receive four or more offers, according to a recent Zillow report.
As a result, some homeowners—particularly younger ones—are reconsidering selling and instead opting to rent out their homes. About 66% of sellers thought about renting out their home instead of selling it, with younger sellers (ages 18 to 39) most likely to explore this option, according to Zillow.
Takeaway for leaders: Encourage flexibility.
Encourage clients to explore rental income opportunities if selling isn’t yielding the desired results. Renting out a property can be a smart way to generate income while holding on to an appreciating asset. Offering property management services or educating sellers on the rental market can position your business as a valuable resource.
What do these contradictions mean moving forward?
Here’s what to keep in mind moving into the new year:
• Adaptability is key: With mortgage rates higher than expected and regional disparities in the housing market, flexibility in your strategy is critical. Don’t wait for the market to behave as predicted—be proactive in finding ways to meet customers where they are.
• Expand offerings: As renting grows in popularity, businesses that serve both renters and homeowners will likely be in a stronger position. I recommend real estate companies focus on services like property management and rental advisory to capture a wider audience.
• Educate clients: Buyers, sellers and renters are all navigating a complex market. Position yourself as a trusted advisor by helping them understand all of their options.
Ultimately, the 2025 real estate market is filled with contradictions, reflecting broader social and economic trends.
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