Why Real Estate Remains a Strong Investment in 2025:
Real estate has long been viewed as one of the most stable and profitable forms of investment. While markets fluctuate and interest rates change, real estate consistently stands as a reliable source of income and long-term wealth creation. One key driver of this stability is the undeniable growth of the rental market, which continues to offer compelling returns for investors. As the average age of homebuyers continues to rise, many Americans find themselves renting longer—sometimes for their entire lives—thus increasing the demand for rental properties. Even in a challenging market, the need for housing remains strong, and large institutional players, like JPMorgan Chase, are increasingly investing in the rental sector to capitalize on this demand.
A combination of factors has contributed to the rapid increase in rental demand. The sharp rise in home prices, increased interest rates, and soaring inflation have made homeownership unattainable for many, especially first-time buyers. As a result, millions of Americans are opting to rent for longer periods or indefinitely. In fact, recent trends indicate that the median age of homebuyers has risen significantly over the last few decades, and these shifts are impacting both the housing market and the rental market in profound ways.
In the 1980s, the median age of a first-time homebuyer was 30 years old. By 2024, that figure had risen to 38 years. In fact, the National Association of Realtors reports that the average age of repeat homebuyers has risen even more sharply. These demographic shifts reflect the fact that many younger buyers are facing challenges in entering the housing market, whether due to affordability issues, student debt, or the simple challenge of saving for a down payment. What’s clear is that this trend isn’t likely to reverse anytime soon. The increasing cost of homeownership means that many younger people will spend a much longer portion of their adult lives renting, and some will continue to rent indefinitely.
As these trends unfold, it’s clear that real estate investors stand to benefit. In fact, the need for affordable rental housing is expected to grow dramatically as more people opt to rent rather than purchase homes. For investors, this presents a compelling opportunity to generate stable, passive income through rental properties. This demand for rental housing is expected to keep growing, particularly in high-demand metropolitan areas and suburban locations where population growth continues to outpace housing supply.
Among the most significant shifts in the real estate sector is the growing interest in build-to-rent (BTR) properties. The BTR market, which focuses on building homes specifically for rental purposes, has seen a surge in institutional investment in recent years. One of the most notable players in this market is JPMorgan Chase. In a partnership with Georgia Capital and Paran Homes, JPMorgan launched the Laseter Development Group, which focuses on building single-family rental homes in high-growth areas across the Southeast.
The Laseter Development Group is targeting some of the most in-demand areas in the country, including cities like Atlanta and Nashville. These regions have seen significant population growth, making them prime locations for new rental developments. By focusing on these high-growth, high-demand areas, JPMorgan and its partners are capitalizing on the growing need for single-family rental homes in places where homeownership may no longer be attainable for a large portion of the population.
JPMorgan’s move into the BTR space signals a shift in the market where institutional investors are increasingly viewing rental housing as a long-term, profitable investment. As these companies continue to build thousands of single-family rental homes, the rental market is positioned to remain strong for the foreseeable future. Additionally, these large-scale developments provide renters with high-quality options in desirable areas, which helps alleviate some of the pressure on local housing markets.
One of the key takeaways from the trend of rising median homebuyer age is the significant gap between the cost of owning a home versus renting one. The Cost of Homeownership Versus Renting chart (Figure 7) from a report by the National Association of Realtors clearly illustrates how, for much of the past two decades, renting has been more affordable than homeownership. The cost of renting has consistently been lower than the average mortgage payment for single-family homes, even factoring in tax deductions and other homeownership benefits.
The graph shows the relationship between the cost of renting and the cost of owning a home, with periods where renting was significantly less expensive. The most recent data indicates that while homeownership has become more expensive, the gap between renting and owning continues to favor renting, especially in the current economic climate. With mortgage rates and home prices rising dramatically in recent years, many renters are seeing the benefits of remaining in rental properties rather than taking on the financial burden of buying a home.
Furthermore, with the median age of homebuyers continuing to climb, there is increasing evidence that the majority of people are now waiting longer to purchase their first home. Many are opting for rentals because they are more affordable in the short term, and the financial strain of homeownership is simply too great. For real estate investors, this presents an opportunity to meet the growing demand for rental housing, particularly for affordable rental units that can cater to people who are priced out of homeownership.
As the cost of living continues to rise across the country, many renters are facing a growing affordability gap. In fact, the U.S. Department of Housing and Urban Development (HUD) estimates that over 11 million renters are paying more than half of their income on rent, which places them in the category of “severely cost-burdened.” This problem is especially prevalent in urban areas, where wages are stagnant, and housing costs are rising faster than inflation. The result is that millions of Americans are struggling to find stable, affordable housing. For investors, this situation provides an opportunity to help solve this crisis while also generating consistent cash flow from rental properties.
The need for affordable rental housing has never been more pressing. As institutional investors like JPMorgan Chase & Co. focus on build-to-rent developments, they are making a significant contribution to addressing this crisis. These large-scale developments offer more affordable options for people who can’t afford to purchase homes but still need access to quality housing in high-demand areas. For real estate developers and investors, there is an opportunity to capitalize on this growing need by focusing on the construction and management of rental properties that provide both value to tenants and strong returns for investors.
Despite current challenges in the economy, such as rising interest rates, home prices, and inflation, real estate remains a solid investment. The growing demand for rental properties, especially in high-growth urban areas, indicates that real estate investments will continue to generate reliable cash flow and long-term returns. The increasing age of first-time homebuyers, paired with the escalating costs of homeownership, means that more people will continue renting, which in turn drives up the demand for rental housing.
As large institutional investors, such as JPMorgan Chase & Co., continue to invest in the build-to-rent sector, it’s clear that real estate is a long-term play that offers multiple benefits: from providing housing options to meeting the growing demand for rental properties. For real estate investors, the future looks promising, and now remains an ideal time to capitalize on these trends. By continuing to focus on building and investing in rental properties, investors can create a stable portfolio that meets the ongoing needs of the rental market.
