“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Winston Churchill –
As we head into the last month of the last quarter of 2025, what a strange year it’s been for the post-pandemic housing market! With the current market all but frozen over it’s no wonder that more people are choosing to rent rather than buy. In “normal times”–if there is such a thing anymore– this increased demand for rentals usually leads to rental prices going up. And in some major metros that is still the case (think New York City, Los Angeles, Silicon Valley). But even as the demand for rentals has increased many rental prices continue to drop. This flies in the face of “normal” and indicates further troubles ahead for the housing market. But don’t despair because if you look past the surface there is a silver lining. Here’s how a strong rental market is good news for agents:
IT’S A RENTER’S MARKET
Currently there is a high demand for rentals thereby making it “strong” in terms of demand. However, rental prices have paradoxically continued to trend downward which means it’s not strong as far as landlords are concerned. According to Realtor.com, October marked the 27th consecutive month of year-over-year rent declines. Compared with the same period in 2024 the typical asking rent shed $29 (1.7%). The median rent across the 50 largest U.S. metros was $1,696 in October, down $9 from September. This marks the third straight month-over-month drop, indicating that the rental market has entered a period of slowdown. In addition, median asking rents fell year-over-year across all unit sizes with the smallest dwellings seeing the largest drop at 2.1%. By comparison, housing prices continued to show appreciation of 1.4% in that same month of October 2025 (albeit markedly down from the roaring pandemic years of 2020 to 2023 in which U.S. median home prices averaged double-digit increases).
WHY MORE ARE RENTING RATHER THAN BUYING
It’s no secret why more are choosing to rent than buy, in particular first time home buyers. Unaffordable housing prices, high mortgage rates, stagnant wage growth, increasing property taxes, sky-high insurance and a shaky job market are the headwinds pushing potential buyers towards rentals, even as active listings ticks up. In most cases this would be great news for landlords and lead to ever increasing rental prices based on demand. But irrational exuberance during the pandemic years led to an over-supply of rentals with corporate investors, second-home vacation rentals and mom-and-pop landlords all jumping into the rental market with gusto. The unquestioned expectation, as home prices surged at an unprecedented 54.9% yoy was that rentals would likewise see increased demand and meteoric growth. As such, housing speculators and real estate investors ate up the already short supply of housing inventory thereby pushing sales prices even higher while new construction got the green light to build more homes and apartments.
But now it’s a different story. Higher supply from new construction, a slower overall housing market and job anxiety have left many rental investors holding the bag. Those that can’t afford to hold their investment are putting those properties on the market, leading to even more increased inventory and longer days on market. As of late 2025 almost 20% of active listings in September and 25% of listings in June had price cuts. And August 2025 held the highest rate for price cuts for that month in records dating back to 2012. One would expect buyers to step off the sidelines to buy but because of the afore-mentioned economic realities things continue to remain out of reach for most.
Statistics show that 65.8% of Americans own their homes versus 34% who rent. However, the renting population is increasing due to factors like high housing prices, interest rates and increased rental inventory leading to reduced rental prices. Ironically, another factor that may be contributing to increased rental inventory is demigration from the U.S. Still, renter households have grown faster than homeowner households. It took some time to get where we’re at and it will take some time to land in a better place as far as the housing market is concerned. If you are having ever increasing moments of deja vu from the Great Recession of 2008 you are not alone. However, it’s important to see past this and focus on next steps.
LEVERAGE THE RENTAL MARKET
Although not an overnight fix, it makes more sense than ever to expand your real estate services to include the rental market. For real estate agents and property management companies, a strong rental market provides a reliable source of income through leasing commissions and management fees, even during sales slumps. More importantly, working with renters allows you to build long-term relationships that can be fruitful in the future. Today’s satisfied renter client is likely to become tomorrow’s homebuyer client, providing a pipeline for future sales business and referrals. But this renter-friendly market is not forever and most renters would rather own. As such your best strategy is to help them get there. Now is the perfect time to recognize the silver lining and build a foundation for future business by expanding your presence in the rental market.