Thursday, March 13, 2025

Guardian Asset Management

Single Family Rental

Newsletter

Best Counties for Buying Single-Family Rentals in 2025

The report shows that the annual three-bedroom gross rental yield (annualized median gross rent income divided by median purchase price) among the 361 counties analyzed is projected to be 7.45 percent in 2025. That is down slightly from an average of 7.52 percent in those same markets during 2024.

Yields are declining from 2024 to 2025 in nearly 60 percent those counties after growing in a small majority from 2023 to 2024.

Investment returns for landlords are slipping as home prices are going up faster than rents across slightly more than half the country. From 2024 to 2025, median single-family home prices rose more than median three-bedroom rents in 54 percent, of the markets analyzed. The gaps – usually more than three percentage points – pushed rental yields downward.

That has happened even as the nation’s ongoing rise in home values around the country has made home ownership less affordable for average wage earners. Price spikes have helped push marginal home seekers out of the purchase market toward rentals, putting upward pressure on rents. But rising prices also have made it tougher for investors by boosting their buy-in costs.

New Analysis Favors Renting

Over Buying for Building Wealth

Conventional wisdom has suggested for years that buying a home is more financially advantageous than renting. Homeownership offers the opportunity to build equity, enjoy a predictable mortgage payment and take advantage of tax incentives, among other benefits.

However, a new analysis of the choice between buying and renting could tip the scales toward the latter in the quest to build wealth, according to a report by Hunter Housing Economics highlighted by Quinn Residences, which develops single-family homes for rent.

The report said that while monthly payments, accumulation of equity and initial cash outflows should be included when considering renting or buying, other factors should also be considered. These include the long-term costs of renting vs. buying over the desired occupancy period and a realistic comparison of probable asset returns over time.

Asking Rents Creeping Upward

A new study from Redfin has found that the median U.S. asking rent rose 0.4% year-over-year to $1,607 in February—the first increase in six months and the biggest in nine months. On a month-over-month basis, asking rents climbed 0.6%.

Though asking rents may have inched up in February, they have remained relatively flat for the past 10 months, compared to the large swings of the past few years. Rents skyrocketed as much as 18% year-over-year during the pandemic moving frenzy in 2021, and then fell as much as 4% in 2023. Asking rents are now flattening because rental supply and demand are near equilibrium.

Richmond, Raleigh Rank as the Friendliest Cities for Single-Family Renters

Single-family renter households have grown by 31% over the past two decades, outpacing the 21% increase in owner-occupied households. Alongside that growth, several metropolitan areas stand out as the best locations for single-family renters.

These findings come from a recent analysis by real estate listing website Point2Homes. The study examined the 75 largest U.S. metros to determine the best cities for single-family renters. Point2Homes used 25 indicators across economics, housing affordability and quality of life.

According to the study, a growing number of renters are turning to single-family homes due to common market pressure points such as higher home prices and mortgage rates, as well as dwindling inventory. Point2Homes also said that some metros areas are better at accommodating single-family renter demand than others.

“The good news? Some metros manage to offer a mix of opportunity and quality of life, thereby proving that ‘location, location, location’ matters just as much for renters seeking comfort and stability without the burden of ownership,” Point2Homes explained in the report.

Housing Market Predictions For 2025:

When Will Home Prices Drop?

As 2025 gets underway, the housing market remains challenging, with stubbornly high home prices and mortgage rates prolonging buyer struggles. Mortgage rates hover closer to 7% than 6%—far from what most economists and analysts forecasted—within range of the rates we saw this time last year. Sky-high home prices also continue to ascend, especially in popular areas of the country.

Nonetheless, the home price surge that ignited in 2020 has noticeably lost steam over the past year. Prices even declined in some markets, thanks to increasing inventory and softer demand due to affordability challenges. Experts project this deceleration will persist in 2025.

Renters Ought to Target this Kind of Home

for a Better Deal

If you’re looking to rent a house instead of an apartment, you might be in for a price shock. 

The cost of renting a single-family home has skyrocketed, outpacing the rise in apartment rents and leaving many tenants stuck in limbo. 

According to a recent Zillow report, median rent prices for single-family homes have jumped 41% since the pre-pandemic days, while multi-family units have seen a comparatively modest 26% increase in the same period.