As we head into March, housing industry prognosticators continue to offer new perspectives on current trends and outlooks for real estate investing in 2025. With recent talks of tariffs and other policy changes, a lot is still up in the air. However, broader economic factors outside of new federal policies have begun to unveil a positive outlook for the future of real estate in 2025 and beyond. Below, we’ll discuss the biggest insights, factors, and outlooks in real estate investing in 2025 for fix and flip, new-build, and rental investors.
Fix-and-flip & New-Build Investing in 2025
The Federal Reserve’s pivot to reduce interest rates throughout 2025 and 2026, along with improving job numbers and gains in the stock market hint at two big developments for the real estate investing market in 2025:
- We may have seen the peak of inflation and construction costs in 2024.
- Motivated homebuyers are better equipped and poised to return to the real estate market in 2025.
With the market set to heat back up, let’s look at the latest developments and outlooks for fix-and-flip and new-build investors this year:
Homes with flex space or combination room appeal (gym/basement, laundry room/office, etc.) enable buyers to get the most out of their square footage. In short, co-living and flex spaces will attract homebuyers and skyrocket fix and flip home values in 2025.
- Home prices will continue to rise in 2025. With the U.S. still short 4.5 million homes and the housing deficit continuing to grow, home prices are expected to continue to rise at a similar rate to Q4 in 2024 (4%). While this will drive some consumers to the rental market, it will also create a vast pool of homebuyers looking for cost-effective fix-and-flip and new-build properties.
- More new builds will be greenlit in 2025. As you can imagine, the housing shortage crisis and increasing push for new builds paints an optimistic picture for builders in 2025. There are indications that regulatory and zoning law burdens will ease in 2025, making licensing and approval for new builds much easier for investors in the upcoming year.
- Affordability is the driving force for today’s homebuyers. Affordability is the top priority for today’s young homebuyers juggling the costs of student debts and ongoing inflation. The latest real estate investing 2025 predictions indicate an uptick in interest for smaller homes within secondary and suburban markets.
- Urban infill projects will be on the rise in 2025. While consumers look to the suburbs, city developers search for avenues to create affordable housing within their metropolis. Urban infill projects are expected to increase in cities throughout the country in 2025. These projects will green light and streamline countless new-build projects to improve housing affordability and revitalize city neighborhoods through conscious planning and development.
- There will be an increase in homes with co-living & flex space amenities. Today, homebuyers are looking to stretch every penny and make the most of their property. By providing single-family homes with co-living set-ups, consumers can take in family members or rent a unit to mitigate costs.
Homes with flex space or combination room appeal (gym/basement, laundry room/office, etc.) enable buyers to get the most out of their square footage. In short, co-living and flex spaces will attract homebuyers and skyrocket fix and flip home values in 2025.
With the average fix and flip and new build return on investment (ROI) between 18-27% (compared to 10% average returns from stock market trading), real estate remains one of the most profitable investment avenues on the market. As consumers flock back to the homebuying market and governments look for ways to reduce housing shortages, investors have a unique opportunity to meet consumer demands for homes with new constructions and fix and flip properties in 2025.
The Rental Real Estate Investing Market in 2025
After 3+ years of a surging multifamily supply push to mitigate rental costs, multi-family construction declined 25% in 2024. This will give rise to rental demands in 2025.
For investors learning how to start investing in rental real estate, and building real estate investing strategies, there are several rental factors to consider heading into 2025 and beyond:
Additionally, while navigating the evolving regulatory challenges in the residential rental property market can sometimes prove difficult, the loosening of co-occupancy zoning laws within SFR has created a unique opportunity for investors. The addition of accessory dwelling units (ADUs) to single-family homes can also create new revenue streams for investors to increase overall profits.
- Landlords will continue to raise rental prices in 2025. To combat rising operational costs, landlords continue to raise rent prices–with the median rent for a two-bedroom apartment hitting $1,887 recently. Even with markets and inflation stabilizing, expect rental increases between 3-6% on average this year.
- Still, 2025 will be a renter’s market. Even with the slowdown in new constructions and a slight rise in rental costs, rentals will be a more affordable option for young consumers entering the market–with the median mortgage payments hitting $2,205 as of January 2025.
- The demand for single-family rentals (SFR) is rising–and will continue to rise. Today, roughly 31% of renters live in single-family homes, an increase of 3.5 million renters over the past two decades. Expect rental investors to respond and continue to add SFR units to their investment portfolio in 2025.
Additionally, while navigating the evolving regulatory challenges in the residential rental property market can sometimes prove difficult, the loosening of co-occupancy zoning laws within SFR has created a unique opportunity for investors. The addition of accessory dwelling units (ADUs) to single-family homes can also create new revenue streams for investors to increase overall profits.
- The latest real estate innovations and technology will be essential for success. With Gen Zers, the most digitally connected generation yet, entering the rental market in droves, the time to adopt and utilize the latest real estate technology, like AI and automation, was yesterday. Creating a digital journey for shoppers to explore properties and simplify tenant management will be critical to finding the best tenants and turning a profit.
With rising average rent prices not yielding the surge in consumer demand and untapped opportunities for SFR units, rental real estate investing in 2025 is on an upward trajectory. With the right technology, financing, and real estate investing strategies, investors are poised for success now, and for years to come.
Final Thoughts: The Future of Real Estate Investing
Housing market predictions show positive signs for real estate investors in 2025 and beyond. With demand on the rise in both the homebuying and rental markets and anticipation for home sale and tenant rental increases, real estate investing in 2025 looks stronger than ever. Therefore, investors with a powerful real estate investing strategy and reliable financing have the opportunity to scale their business and increase their bottom lines in the years to come.
As always, being prepared with accessible and fast financing is critical to investing success. Finance of America Commercial (FACo) provides top-of-the-line lending options with flexible terms and fast approval times, to help investors capitalize on the best investment opportunities.
With the latest in real estate innovation at our disposal, our team of industry experts can tailor the ideal loan program for your unique investment needs. We provide:
If you’re looking to succeed in the real estate investing market in 2025, let our team of trusted professionals give you the financial tools and insights to succeed. CLICK HERE to schedule a FREE consultation today!
As always, being prepared with accessible and fast financing is critical to investing success. Finance of America Commercial (FACo) provides top-of-the-line lending options with flexible terms and fast approval times, to help investors capitalize on the best investment opportunities.
With the latest in real estate innovation at our disposal, our team of industry experts can tailor the ideal loan program for your unique investment needs. We provide:
- Fix and Flip Lending
- Stabilized Bridge Funding
- Construction Funding
- Single Rental & Rental Portfolio Financing
If you’re looking to succeed in the real estate investing market in 2025, let our team of trusted professionals give you the financial tools and insights to succeed. CLICK HERE to schedule a FREE consultation today!
