The year 2025 is shaping up to be pivotal for renters across the United States, particularly as rising home prices and interest rates continue to hinder prospective homeowners. Experts suggest this could be the year of the renter, especially as the Midwest offers attractive options amid changing economic conditions.
According to data from Realtor.com, the Midwest maintains the lowest median rent prices across the nation, standing at about $1,450 per month. This is significantly less than other regions, with the South averaging around $1,600, the West at $1,950, and the Northeast even higher at about $2,450. This regional affordability is drawing attention as more people contemplate their housing options this year.
"The Midwest is more affordable for renters than the other regions of the country, which probably doesn't come as a huge surprise," stated Joel Berner, senior economist at Realtor.com. He explained how the overall rate of rent increases has recently stalled, which could benefit prospective renters.
Daryl Fairweather, chief economist at Redfin, echoed this sentiment, saying, "Everywhere else got really expensive during the pandemic, including the South, and now the Midwest is one of the only affordable regions left." This affordability is drawing renters as they explore their options amid rising prices elsewhere.
While rental prices are on the rise, the growth appears to have several caveats. Kansas City, for example, was noted for having the highest rate of rent growth at 3.1% as December 2024 closed. On the other hand, St. Louis experienced slower growth at 1.3%, and some areas within the Midwest are seeing prices stagnate or decrease. The overall rental environment is shifting, leading to improved conditions for renters.
The rising affordability has prompted many to re-evaluate their living situations. Renters are finding themselves at what is known as "a renter's market," as inventory is trending toward pre-pandemic levels. Berner commented, "If you can find a place like an affordable Midwestern market to live for a couple of years, save up some cash...that's going to be really effective." For renters, this means they can delay buying and store funds for larger down payments when the time is right.
The impacts of skyrocketing home prices are causing first-time buyers to reconsider their purchase timelines as the median age of first-time homebuyers has grown from 35 to 38, according to the National Association of Realtors. This reflects the difficulty new buyers face as affordability challenges mount. Berner added, "First-time home buyers who don’t have equity built up are having to finance large portions of their purchases."
David Nall, a real estate professional based in St. Louis, advises prospective buyers to study the market closely. "If something meets their criteria and excites them, it’s probably going to excite other buyers as well," he said. His advice for renters includes being active and informed as the market evolves.
Renters should leverage their position to negotiate favorable lease terms, as Fairweather points out. With more new apartment units coming onto the market, potential renters have increased bargaining power. "By comparing your rent to other units nearby, you can negotiate with your landlord to lower costs if you’ve been paying rent consistently on time," he suggested.
Overall, the rental market’s dynamics are altering due to various economic factors, including the construction boom of new apartment complexes developed during the pandemic. Fairweather noted, "We think it's going to continue for the next year," emphasizing continued opportunities for renters to find favorable lease terms.
Despite the improvements, challenges remain for many renters, particularly those living tighter markets. The struggle to find affordable housing persists as investor activity puts additional pressure on the rental supply.
Looking abroad, the rental market trends for 2025 are similarly troublesome, particularly observed across major cities like those within France. While the average rent is seeing increases, significant disparities remain, particularly within urban centers where costs can substantially exceed other areas. The average cost can reach as high as 38.7 euros per square meter in Paris, which sharply contrasts with the more accessible rates found elsewhere, like Saint-Étienne.
This disparity is resulting from rising demand due to demographic changes and new businesses entering these metropolitan areas, leading to housing challenges for low-income residents and young professionals.
Nevertheless, as 2025 progresses, tenants are encouraged to stay patient and proactive. With careful market observation and strategic planning, many renters might obtain reasonable leases and make the best out of their housing situation.
The upcoming months will be pivotal, shaping the outlook for both renters and homeowners alike. The ability to adapt to shifting patterns, whether through negotiation or informed decision-making, will dictate experiences within the rental market as it navigates the changes brought by economic evolution.