Provided by Bigger Pockets
According to data from Realtor.com, Q4 saw a promising stat: Sellers were coming off the sidelines and listing their homes. Listings were up 6.1% in December from the previous year, the largest year-over-year gain since June 2021. Should this continue, it could mark a loosening of the market, specifically the so-called “lock-in effect.” In short, it means more investments to buy and sell and a return to normal conditions we haven’t seen since before the pandemic.
Bolstering this is news that active listings were up more than 23% in mid-December from the prior year, and new listings growth remained robust.
Dana Bull, a real estate consultant and agent with Compass, told CBS News:
“I have somewhere between 15 and 18 sellers who are thinking about listing this spring, which is the most that I’ve ever had going into the new year. What’s been going on is most of these people have been considering selling for the past 18 months, but they’ve been in this holding pattern and wanting to wait and see what is going on with interest rates. At this point, they’re not deciding that they cannot wait for external factors to be optimized, and they need to make their move. I think we will see a decent-sized uptick in inventory—nothing too crazy, but people are getting off the fence.”
It’s a welcome relief from the ongoing fight to lower interest rates, which are incredibly still hovering just below 7%—even after the Federal Reserve’s recent rate cuts.
Buyers and Sellers Are Tired of Waiting
“It’s certainly not good news for homebuyers when mortgage rates get bumped up,” Lawrence Yun, the National Association of Realtors chief economist, told the Wall Street Journal. Sales have started to gain momentum in the past few months as buyers and sellers run out of patience waiting for lower rates and come to the market regardless, he added.
Also concerning for buyers is the steady uptick in home prices. However, after a stagnant real estate market since 2022, when the Fed began a series of 11 rake hikes, the increase in volume leaves investors with an interesting conundrum: Accept that rates will not go down, buy now, and lock in for future equity appreciation and rent increases despite neutral or even negative cash flow in the short term, or wait and pray for a rate reduction.
Home Prices Will Fall in 2025, Rise in 2026
Investment giant Morgan Stanley predicts that nationally aggregated home prices are likely to fall 2% in 2025.
“We believe the housing market, and home prices in particular, are on a healthy foundation,” Jim Egan, Morgan Stanley’s head of housing market research, told ResiClub, as reported in Fast Company. “We by no means view this as a correction in [national] home prices—just the dynamic introduced by increasing inventories, allowing home price appreciation to dip below 0%.”
Morgan Stanley predicts that after a year of zero appreciation, home prices will start appreciating by 3% nationally in 2026.
More Homes for Sale Could Help Lower Prices
If increased homes on the market, in conjunction with stubbornly high rates, results in a softening of home prices, as Morgan Stanley predicts, 2025 could be an opportune time for investors to buy. Flippers could start a rehab project and sell in 2026, when prices increase.
In addition, even with a projected 11.7% increase this year, the number of homes for sale will still lag pre-pandemic levels by 23%, according to Realtor.com.
We use QuickBooks daily in our rental property business!
It’s used to invoice tenants for their rent, track expenses by property and unit number, and our tax advisor can log on anytime to get information he needs for processing taxes or analyzing our data for goal setting meetings!
QuickBooks is the #1 accounting software for small businesses, and today you can take advantage of 30% off your first 6 months of QuickBooks Online using our exclusive Business Affiliate link.
How to Make the Most of the 2025 Market
Buying now, during a relatively quiet market in anticipation for things to heat up in 2026, could be a good strategy, but only if you are prepared. Here are some things to bear in mind.
Analyze your financial position
Buying an investment for tax benefits and long-term appreciation makes sense if you have a well-paying, stable job and can absorb low cash flow. Just make sure you are not losing money every month.
What are your investment goals?
If you intend to do the BRRRR method with low cash-flowing properties and have sketchy personal finances, you are setting yourself up for a big fall. Slow and steady wins the race in this current market with so many unknowns—unless you are sitting on a pile of cash.
What is your risk tolerance?
If the thought of coming out of pocket to pay a mortgage on an empty building or covering an unforeseen expense keeps you up at night, the stress of owning a rental isn’t worth it. You would be better off house-hacking a property you are already paying a mortgage on or looking for a cheaper property in a decent area that you can buy for cash and forgo the sleepless nights.
Flip homes you can afford to hold on to
Expecting a quick sale of your remodeled McMansion in 2025 might be risky. If you are in the flipping business, stay low to the ground. With high interest rates, the market for more affordable homes will be more plentiful than that for larger homes.
Unless you can afford to absorb the carrying costs, think small. Look to buy at a discount and sell in 2026, when house prices are expected to rise.
“We have been witnessing the death of the starter home for the better part of a decade,” Brittany Webb, director of research at the National Housing Conference, told CNET. “That’s made it particularly difficult for first-time homebuyers to find affordable homes in areas where they want to live.” This is a promising sector for flippers to explore.
Pay attention to the effect of the LA wildfires
The LA wildfires are bound to have a sizable impact on real estate in 2025. With 100,000 people displaced and many working class, the demand for rental housing will be huge. This latest tragedy will only exacerbate the state’s housing crisis. Look at markets to serve the affected LA community—those who have to stay in the area, as well as those looking to leave.
Final Thoughts
2025 appears to be a year for consolidating and preparing for 2026, so don’t expect a frenzied buying and selling market. As more properties come on the market, picking and choosing the best deals to carry you over into 2026, where you can sell or refinance, is a savvy strategy.
There are too many unknowns to make wider predictions—how the incoming presidency will affect the economy and interest rates, what will happen to inventory, whether there will be a labor shortage for construction, and how geopolitics will affect the supply chain and construction costs. Therefore, with so much up in the air, playing it safe is the best policy.
Did you enjoy this article?
This is an example of what is included on our FREE weekly newsletter, Landlord Weekly.
Subscribers get access to our free forms, email templates, and guides! As well as…
▪️Landlord Tips ▪️ Early Access to Our Blogs ▪️ Landlord Specific Articles by Other Industry Pro’s ▪️ Podcast Links
To check out a sample of our newsletter, click one of the links below👇
By Leah Maher
The multifamily rental market is evolving with changing tenant demographics, technological advancements, and changing work dynamics, not to mention that a ton of new construction is about to wrap up. This shift presents new opportunities for property managers to leverage
the demographic data and today’s innovative technologies to enhance their operations, increase foot traffic, and improve tenant retention.
THE IMPACT OF NEW APARTMENT SUPPLY ON THE RENTAL MARKET
A record number of multifamily units are set to hit the market this year. In 2022, building permits were issued for 707,000 multifamily units, the highest number since 1985. Projects initiated two years ago are now reaching completion. As a result, 2023 saw the most apartments enter the market since 1987. And 2024 is on track to surpass those numbers. Several factors are driving this increase in construction. Low interest rates in the early 2020s made financing more accessible for developers, while strong rental demand and rising rents
incentivized new projects. The surge in new apartment supply is already having a noticeable impact on rent prices and vacancy rates, which demonstrates the economic relationship between supply and prices. For investors and developers, these trends highlight the importance of carefully considering local market conditions.
EVOLVING TENANT DEMOGRAPHICS AND PREFERENCES
As noted in the previous section, markets with the most available multifamily properties are seeing a decline in rental value, which equates to more choice for the renter when selecting a home. To make sure your rentals are beating the competition, let’s discuss the insights we can deduce from renters’ demographic trends.
Gen Z’s Growing Influence
The majority of households are headed by adults under the age of 35. Crazy as it sounds, the oldest Gen Z’ers are nearing 30 years old. As a dominant force in the rental market, Gen Z’ers
are more likely to seek out properties with eco-friendly features, smart home technologies, and shared spaces that foster social interaction.
To attract and retain Gen Z renters, property managers should focus on:
✓ Providing self-touring options for interested renters, such as InstaShow
✓ Implementing robust digital platforms for communication, maintenance
requests, and rent payments
✓ Offering flexible lease terms and move-in options
✓ Creating Instagram-worthy spaces and amenities that appeal to social
media-savvy tenants
✓ Emphasizing sustainability initiatives and green building practices
✓ Providing high-speed internet and tech-enabled amenities throughout
the property
Remote Workers
Remote work opportunities have skyrocketed since the pandemic, significantly impacting rental property design and amenities. To meet the demands of remote workers, property managers are also focusing on:
- Upgrading internet infrastructure to
provide reliable, high-speed connectivity - Offering private meeting rooms and
business centers - Creating outdoor workspaces with Wi-Fi
access - Implementing package management
systems to handle increased deliveries
Increasing Number of Older Renters
While most renting households are headed by adults under 35, the 65+ age group is becoming the fastest-growing renter cohort in the United States. With specific needs and preferences that differ from younger demographics, they often seek:
- Accessibility features and single-level
living - Community spaces that promote social
interaction - On-site fitness centers and wellness
programs - Proximity to healthcare facilities and
public transportation - Enhanced security measures and 24/7
maintenance support
A landlords one stop shop for tenant management…for FREE
You can’t beat free and the only time you pay is if you want to purchase a lease or have expedited rent deposits. Most everything else costs zip, zero, zilch.
NEW BUILDS COME WITH NEW TECH: HIGHER RENTAL VALUE AND MORE REMOTE WORK OPPORTUNITIES FOR PROPERTY OWNERS
With 2022’s new construction finally market ready, most new builds come equipped with the latest technology. Built-in tech means higher rental value, better chances of attracting quality tenants, increased automation for property managers, and more opportunities to effectively manage multifamily units remotely.
Rise of Smart Home Features in Rentals
Smart home technologies offer convenience and energy efficiency to tenants while providing valuable oversight and notifications to property managers. Popular smart home features in rental units include:
- Smart thermostats for energy management
- Keyless entry systems, smart locks, and access control management
- Voice-controlled lighting and appliances
- Smart security cameras and doorbell cameras
These technologies not only attract tech-savvy tenants but also offer property managers improved security, reduced energy costs, and remote monitoring capabilities. Smart home features can lead to higher rental rates and increased property values, making them a worthwhile investment for many property owners.
ADOPTION OF AI AND MACHINE LEARNING IN PROPERTY MANAGEMENT
Artificial intelligence and machine learning are transforming property management practices, adding security amid the rise of real estate scams, and offering innovative solutions for various aspects of operations:
- Tenant screening: AI algorithms can
analyze applicant data quickly and
accurately, reducing bias in the selection
process. The latest touring software
verifies identities by comparing real-time
selfies to government issued IDs, also
captured in real time. - Predictive maintenance: Machine
learning models can forecast equipment
failures, allowing for proactive
maintenance and reducing downtime. - Energy optimization: AI-powered
systems can adjust building systems in
real time, maximizing energy efficiency. - Chatbots for customer service: AIdriven chatbots can handle routine
inquiries, freeing up staff for more
complex tasks
DIGITAL TOOLS CHANGING TENANT COMMUNICATION AND PROPERTY MARKETING
The adoption of property management software and apps is revolutionizing how property managers interact with tenants and market their properties:
- Online portals for rent payments, maintenance
requests, and lease management - Virtual reality tours for listings, and self-tours for
increased traffic and secure access management - Social media integration for community engagement
and brand building - Data analytics tools for market analysis and
performance tracking
These digital tools provide 24/7 access to services, streamline communication, and offer valuable insights into tenant preferences and behavior.
As technology continues to evolve, its integration into rental properties will likely deepen, offering new opportunities for innovation in the multifamily sector. Property managers who embrace these technological advancements will be better positioned to meet the changing needs of tenants and stay competitive in an increasingly digital marketplace.
Did you enjoy this article?
This is an example of what is included on our FREE weekly newsletter, Landlord Weekly.
Subscribers get access to our free forms, email templates, and guides! As well as…
▪️Landlord Tips ▪️ Early Access to Our Blogs ▪️ Landlord Specific Articles by Other Industry Pro’s ▪️ Podcast Links
To check out a sample of our newsletter, click one of the links below👇
Source: Beach Front Property Management
ADUs (Accessory Dwelling Units) and tiny houses have become distinctive living solutions in compact living. Understanding these options’ differences is crucial for downsizing or seeking an alternate living space.
ADUs are additional living units on the same property as the main house. They can be converted garages, basement apartments, or separate cottages. ADUs allow homeowners to expand their living space and generate rentals while maintaining the privacy of both units.
On the other hand, tiny houses are compact living spaces intentionally designed to be small and efficient. These houses often feature a minimalist lifestyle, where every inch and corner is maximized for functionality. Their features of affordability and sustainability make them a popular choice for those seeking a simpler lifestyle.
In this blog, we will discuss and explore the differences between these housing units and which compact house suits you.
What is an Accessory Dwelling Unit?
An ADU is a secondary housing unit entirely separate from the main house on the property. ADUs generally have private entrances and have living space, bathroom, kitchen, sleeping room, and eating area. It has everything a main unit has but in a compact style. These living spaces are referred to as granny flats or backyard cottages. These units are mostly garage conversions or basement apartments.
ADUs are gaining wide popularity for their potential to make extra income and add value to the property.
What is a Tiny House?
A tiny house is a compact but fully functional home, usually not more than 400 square feet. Inside this miniature house, you find cleverly designed furniture and storage solutions to make the most of every inch. Tiny Houses can be built on wheels for mobility or a foundation, like traditional homes.
They are cost-effective to buy and maintain in comparison to regular-sized houses. The main concept behind these compact homes is to simplify living and focus on what truly matters to you.
10 Differences Between ADU and Tiny House
Are you using the terms ADU and tiny house interchangeably? You may be surprised that these units differ in definition and function. Here is a list of 10 differences that can help you understand how these housing options stand apart:
1. Size
ADU:
ADUs are generally larger, with more living space. It ranges from a few hundred to over a thousand square feet(other than the main house).
Tiny House:
Tiny houses are quite small in comparison to other housing options. It usually ranges from 100 to 400 square feet.
2. Purpose & Location
ADU:
ADUs are built on the same property as the main house. It usually serves as an additional living space for family members or to earn rental income.
Tiny House:
Tiny houses are often standalone and mobile. Its main purpose is efficient minimalist living. It can be placed on various properties or in tiny house communities.
3. Mobility
ADU:
ADUs are stationary structures. Once constructed, it cannot be moved.
Tiny House:
Tiny houses are typically built on trailers. It makes them mobile and easy to relocate whenever required.
4. Regulations
ADU:
ADUs are subject to local zoning regulations. They are designed to be permanent structures and serve as an additional space in existing property. So, they require permits and compliance with rules by local authorities.
Tiny House:
Tiny houses are often built on wheels or trailers, complicating their legal status. Although having a tiny house in most areas is legal, some places have legal restrictions.
5. Carbon Footprint
ADU:
ADUs can be eco-friendly but may have a larger carbon footprint due to their living space and utility requirements.
Tiny House:
Tiny houses are designed with fewer resources. A home that needs to be moved is usually built with different efficiency standards than a permanent house. It results in a small carbon footprint.
Need a Lease Agreement?
A FREE account gets you access to over 200 free forms. Upgrade to a paid account (monthly, annually, or lifetime)
EZLandlord Forms Is Offering 15% 𝙊𝙛𝙛 For New Customers!
We cannot recommend these guys enough!
👉 State Specific Leases 👉 400 Forms to make your landlord-tenant relationship top notch 👉 200 FREE forms for those not ready to purchase 👉 4.8 Rating with over 5000 Reviews 👉 Pro Members get access to ALL leases and forms for $12 per month OR $75 if you purchase the annual membership 👉 YOU CAN BUY LIFETIME FORMS for $399
USE CODE 𝐒𝐓𝐀𝐂𝐈𝐄𝟏𝟓 to get 15% OFF ALL first-time purchases, EVEN THE LIFETIME FORMS!
6. Incentives
ADU:
In California, the California Housing Finance Agency (CalHFA) operates an ADU grant program that reimburses a said amount in pre-development costs for qualified builders.
Tiny House:
In the case of tiny houses, no such schemes or reimbursements exist for the builders or homeowners.
7. Lifestyle
ADU:
ADUs cater to a more traditional lifestyle, accommodating families or long-term residents.
Tiny House:
Tiny houses are best suited for minimalistic, eco-friendly, and mobile lifestyles.
8. Costs
ADU:
ADUs can be more expensive to build due to their larger size and utility connections.
Tiny House:
Tiny houses are generally cost-effective to build and maintain.
9. Ease of Resale
ADU:
These homes are seen as the future of affordable living spaces. Building an ADU adds to the overall value of the property. So, ADU homes are worth the investment and easy to resale.
Tiny House:
The resale value of tiny houses depends on market demand and location. It is difficult to resell tiny home property because not everyone finds the small space comfortable.
10. Ease of Navigation for Older Adults
ADU:
ADUs incorporate features like wide doorways, ramps, grab bars, and step-free entrances, making them accommodating for older adults or anyone with mobility challenges.
Tiny House:
Due to their compact size and loft beds, tiny houses may pose significant challenges to older adults’ mobility and navigation.
Pros and Cons of Tiny House
Tiny houses offer compact and minimalist lifestyles that are appealing to many. But like any other housing option, it also has a list of pros and cons.
Pros of Tiny House
- They are quick to build.
- They are cost-effective to use and maintain.
- They are minimalist, reducing clutter.
- They are a good option for a bachelor or a family of 2-3 members.
- They offer mobility to its residents.
Cons of Tiny House
- Putting a tiny house at permanent foundations requires a permit, which can be challenging.
- They are often too small to comply with the zoning laws.
- They are considered recreational vehicles (RV) by the law, subject to RV codes and taxes.
Pros and Cons of ADUs
ADUs are gaining significant attention as compact housing options. These secondary living spaces are often found in the same space as the main house. It comes with its own set of advantages and disadvantages. Here is the list:
Pros of ADUs
- They are customizable.
- They are available in a variety of sizes.
- They are more complicit with zoning laws.
- They can increase property value.
- It can be used for multi purposes, like rentals, hobbies, to accommodate expanding family, etc.
Cons of ADUs
- They are usually more expensive than tiny houses.
- They are built on permanent foundations and can’t be moved.
- They have more utility expenses.
Did you enjoy this article?
This is an example of what is included on our FREE weekly newsletter, Landlord Weekly.
Subscribers get access to our free forms, email templates, and guides! As well as…
▪️Landlord Tips ▪️ Early Access to Our Blogs ▪️ Landlord Specific Articles by Other Industry Pro’s ▪️ Podcast Links
To check out a sample of our newsletter, click one of the links below👇