Rents on the Rise: What Five Years of Data Reveal About the Future of Real Estate Investing
The U.S. rental market has undergone a seismic shift over the past five years. From the turbulence of the pandemic to economic swings and shifting housing demands, the rental landscape looks vastly different today. Across the country, we’re seeing a perfect storm of housing shortages, record-high rents, and increasing pressure on property owners to strike a delicate balance between profitability and long-term affordability.
To make sense of these evolving market dynamics, my team and I dug into five years’ worth of real rent payment data sourced from Rentec Direct’s property management software. Unlike many public datasets that rely on advertised rents for vacant units, ours reflects real-world payments—capturing the nuances of renewals, negotiated rates, and rent control measures.
We analyzed more than 351,000 tenant payments from over 301,000 rental properties in all 50 states, uncovering key trends in regional rent growth, economic pressures, and tenant behaviors—offering real insights for investors looking to thrive in today’s complex rental landscape.
Where Rents Have Surged the Most
Nationally, average rents increased 31% over five years. But in ten states, rent growth blew past the 50% mark:
- Arizona: 84%
- Tennessee: 67%
- New Mexico: 65%
- Georgia: 63%
- Maryland: 61%
- South Carolina: 56%
- Alaska: 54%
- Idaho: 54%
- Montana: 54%
- Wyoming: 53%
These surges aren’t random. They track with booming population growth, strong economies, and limited housing supply—especially in the Sun Belt and Mountain West. For investors, these regions spell opportunity, but also risk. Oversaturation and affordability ceilings can quickly lead to higher vacancy rates and tenant turnover—two of the biggest threats to ROI.
Meanwhile, states like Louisiana and New York saw minimal rent movement, with Minnesota standing out for a notable 34% drop—a likely result of sweeping land-use reforms passed in 2020.
Curiously, the states with the highest rents in dollar terms weren’t the ones with the biggest increases:
- Hawaii: $2,132
- California: $2,101
- Washington: $1,785
- New Jersey: $1,758
- Florida: $1,752
These saturated markets may have already hit their affordability ceiling, limiting further upward momentum.
On the flip side, “middle of the pack” markets like Arkansas, Delaware, Maine, Michigan, Oklahoma, Utah, Virginia, and West Virginia posted solid rent increases—hovering around 40%. These states offer relative affordability, rising demand, and growth potential—especially in suburban and secondary markets. Keep an eye on these regions; they may be tomorrow’s top performers.
ROI Is Changing—And Fast
A 31% national rent increase might suggest windfall profits for landlords, but the reality is more complicated. Operating costs have exploded. Inflation, regulatory pressures, and increased maintenance expenses are squeezing margins, forcing investors to rethink their strategies.
The days of simply raising rent to keep up are fading. With expanding rent control policies, eviction protections, and affordability mandates, landlords are under growing scrutiny. Take my home state, Oregon. Well-meaning laws have unintentionally reduced rental housing supply, increased construction costs, and driven rents up even further. Some landlords, unable to stay profitable, are exiting the market entirely—tightening supply and driving up prices yet again.
To stay competitive and profitable, investors need smarter, data-driven pricing strategies. Price units based on actual local demand, not just market averages. Focus on tenant retention—because keeping a reliable renter is far more profitable than cycling through new ones. Consider cost-effective upgrades and thoughtful incentives that justify moderate rent increases while keeping tenants happy.
The new rule of thumb: Play the long game. With due diligence and a tenant-first approach, you can still thrive—even in a tighter, more regulated market.
PropTech: The Unsung Hero of Rental Success
In today’s world, tech adoption isn’t optional—it’s essential. Property management platforms that automate rent collection, maintenance requests, and lease tracking not only reduce manual workload, they cut costs and boost efficiency.
Smart tech gives landlords access to real-time data, enabling better decisions around pricing, maintenance, and resource allocation. On the tenant side, features like mobile apps and online portals improve communication, transparency, and satisfaction—driving retention, which is now one of the biggest contributors to ROI.
When tenant loyalty equals profitability, PropTech becomes your best friend.
What Every Investor Should Know Heading Into 2025
Here are five key insights from our findings to guide your rental investment strategy:
- Sustainable Growth Wins
Small, steady, data-backed rent increases protect your bottom line while keeping tenants in place. - Retention > Turnover
It’s smarter (and more profitable) to invest in tenant satisfaction than to push for top-dollar rent and risk losing good renters. - Regulations Matter
Stay ahead of evolving laws that affect your rights and responsibilities as a landlord. - Let Tech Do the Heavy Lifting
Automation saves time, reduces costs, and keeps both you and your tenants happy. - Don’t Chase Growth Blindly
High-growth states can look appealing, but they’re not always high-return. Target areas with sustainable demand, livability, and fewer barriers to investment.
Final Thought:
The past five years have proven just how fast—and dramatically—the rental market can evolve. But armed with real data, thoughtful strategies, and a tech-forward mindset, smart investors can still find strong returns and long-term stability in 2025 and beyond.