A few months into 2025, we’re seeing distinctive trends emerging. Some have been unfolding slowly over the last several years, while others are developing rapidly as a response to the changing economic and geopolitical climate.
What should real estate investors watch for in the coming year? And how can you stay ahead of the curve to build a profitable real estate portfolio? Find out in our analysis of the top real estate investment trends for 2025.
Top Real Estate Investment Trends for 2025
Here are the top five real estate investment trends and how they are expected to affect investors in 2025 and beyond.
1. Expansion of Affordable Housing
Over the past three years, the median monthly rental rate has increased by 18% and the median home purchase price has increased by 21% (according to the US Conference of Mayors). Meanwhile, wages are failing to keep up with the rising housing costs.
This has been an ongoing concern, particularly in high-value markets, like Los Angeles, where 0% of homes have been more affordable to buy than rent since 2023.
For 2025, we’re expecting the push for affordable housing to continue. However, not everyone agrees on the means of facilitating this expansion. Some Americans want fewer regulations, which will allow builders to develop housing inventory faster, some want to incentivize building through tax credits, and some want a multi-faceted approach.
The current presidential administration supports affordable housing through decreased regulations. At the same time, its threat of tariffs is increasing the cost of materials and its plan for mass deportation is reducing the labor force that many markets rely on for new construction. So taking affordable housing from plan to fruition may be more difficult than expected.
How Investors Can Get Involved in the Expansion of Affordable Housing
Investments in affordable and workforce housing are not only socially responsible but also present stable, long-term returns for investors. Affordable housing investments now provide better returns than luxury housing investments.
Real estate investors can contribute to the expansion of affordable housing in a few different ways:
Section 8 Housing Development
Section 8 is a government-subsidized affordable housing program to help low-income renters (including veterans, struggling families, senior citizens, and the differently-abled, cover their rent. By investing in the construction of new Section 8 developments, you can directly help create housing for some of our most vulnerable Americans while enjoying consistent cash-flow from long-term renters.
Attainable Housing Development
Attainable housing means dwellings that cost no more than 30% of the median household gross income for the area. Attainable housing units are often smaller, low-frills starter homes (including modular homes). While many such homes exist in the US, they are often occupied by long-time owners opting to age in place rather than downsize to a retirement community. By investing in the construction of new attainable housing units, you can help ease the affordable housing crisis while benefiting from quick returns thanks to the high demand placed on these units.
Accessory Dwelling Units
Accessory dwelling units (ADUs) are independent living spaces added to a property with a primary residence. Also known as in-law suites, casitas, and guest houses, ADUs can serve as affordable rental units, while creating passive rental income for the property owner. Property owners (with the space and zoning allowance to do so) can build their own ADUs for passive income. And investors can fund home-flip projects with ADU additions to get the benefits of this investment type without supervising the work themselves.
2. Emphasis on Sustainability and Green Solutions
Sustainability has become a defining trend in residential real estate, shaped by growing environmental concerns, shifting consumer preferences, and financial incentives. With the building sector responsible for approximately 30% of global energy and process-related CO₂ emissions, the urgency to adopt greener housing solutions has never been higher.
Governments and regulatory commissions are tightening efficiency standards, while homebuyers and renters increasingly favor energy-efficient properties that reduce both environmental impact and operational costs.
How Investors Can Get Involved in Sustainable Development
As sustainability shifts from a niche preference to a mainstream expectation, you can strategically position yourself to benefit from this trend.
Energy-Efficient Retrofits
Properties with solar panels, upgraded insulation, and energy-efficient appliances command higher rental rates and resale values. You can acquire older homes and invest in these upgrades to attract environmentally conscious buyers and/or tenants. Plus, there may be government incentives, like tax credits and rebates, available to investors who take on these projects.
Modular and Sustainable Housing Models
Alternative housing solutions, like the ADUs mentioned above, are growing in popularity as affordable and sustainable options. Investors looking to maximize rental income can consider small-footprint, eco-friendly, pre-fabricated units that cater to multi-generational families or urban professionals seeking affordable housing with lower energy costs.
Government Incentives and Financing Options
Many municipalities and federal programs offer grants, low-interest loans, and tax credits for energy-efficient upgrades. You can explore these opportunities in your local market to reduce upfront costs and increase profit margins while contributing to sustainability goals.
For example, many California communities offer the Home Energy Renovation Opportunity (HERO) Program, a type of Property Assessed Clean Energy (PACE) financing. This program enables property owners to finance 100% of the cost for eligible energy-efficient, water-efficient, and renewable energy products, with repayment made through annual property tax assessments.
3. Increased Demand for Hybrid Live/Work Spaces
It’s been five years since the outbreak of the COVID pandemic, and it is clear that the American workplace is forever changed. Today, around 24% of Americans work from home full time with an additional 18% having a hybrid arrangement, splitting their time between home and office.
This has led to a demand for flexible live/work spaces that allow residents to transition from cozy home vibes to efficient work mindsets, often within the same space.
How Investors Can Help Meet the Demand for Hybrid Live/Work Spaces
Developing effective live/work spaces is about understanding the needs of the work-from-home renter or buyer. Here are a few ways to tailor units for this growing demographic.
- Ditch the open floor plans and offer ways to close off spaces. This helps the resident differentiate between work and home.
- Ensure reliable utilities with adequate internet speeds. Working from home requires consistently high internet speeds with minimal outages.
- Include relevant amenities. These professionals often value outdoor spaces like patios and balconies. They may also be willing to pay a premium for community amenities, like fitness centers and clubhouses, which give them a space to meet and connect with other residents.
4. Rise of Co-Living and Shared Spaces
Shared living and co-living allow two or more adults to live together as roommates, each contributing to the rent and daily maintenance of the unit. These arrangements are gaining popularity, particularly among young professionals, looking for community and affordability. By splitting the rent and utilities with roommates, shared living occupants can typically afford nicer accommodations than they could afford alone. And, with so many people spending so much time at home, a roommate often provides much appreciated company.
How Investors Can Help Meet the Demand for Co-Living and Shared Spaces
As is the case with hybrid live/work spaces, developing functional shared spaces is about understanding the needs of this particular demographic. If you are planning to invest in co-living and shared living spaces, consider incorporating the following into your development:
- Add more bedrooms. Some renters are opting for two to four roommates instead of just one, so units with more bedrooms are in high demand.
- Make bedrooms a similar size. Rather than having a clear primary suite and a few kids/guest rooms, distribute space evenly among the bedrooms to make it easier for roommates to split the rent evenly.
- Give each bedroom its own bathroom. Roommates will pay more for private bathrooms.
5. Integration of Technology in Real Estate Operations
The integration of technology into real estate operations has become known as proptech (property technology). Proptech has transformed nearly every aspect of the industry, improving efficiency, transparency, and customer experiences.
Notable implementations of proptech in 2025 include:
- Real estate investment platforms. Online platforms allow investors to buy into higher-return-potential deals that would otherwise be inaccessible to individuals.
- Property management platforms. Innovative software solutions streamline property management tasks, including maintenance requests, rent collection, and tenant communications.
- Virtual tours and augmented reality (AR). Real estate agencies increasingly use virtual tours and AR to showcase properties, allowing potential buyers or renters to explore homes remotely.
- Artificial intelligence (AI) in client interaction. AI-powered chatbots and virtual assistants handle customer inquiries, schedule viewings, and provide property information around the clock.
- Automated valuation models (AVMs). AVMs use algorithms and data analytics to provide real-time property valuations, aiding buyers, sellers, and real estate professionals in making informed decisions.
- Smart home integration. Property owners can use the Internet of Things (IoT) to bring home systems and appliances online for remote control. Residents can now control lighting, heating, security, and more, increasing energy efficiency and convenience.
How Investors Can Leverage PropTech in 2025
Depending on your real estate investment strategy, there are multiple actionable ways to incorporate proptech into your portfolio this year:
- Invest with a proven crowdfunding/syndication platform. Real estate crowdfunding and syndication allow you to buy into a high-value, professionally managed real estate deal with comparatively little capital. This is one of the best ways to invest in pre-vetted real estate deals online.
- Use a property management platform to automate multiple operations. Platforms like Yardi and RealPage make it easier for multi-family residential owners to scale their businesses.
- Implement VR, AR, and AI in your marketing. Show off your available units with VR tours and AR images for an immersive apartment hunting experience. And automatically reply to inquiries with AI chatbots. These upgrades can minimize vacancy losses and increase profitability.
- Provide smart home upgrades. Tech savvy renters and buyers are willing to pay more for plug-and-play smart home features, including phone-controlled lighting, heating, and locks.
Invest with Gatsby to Stay Ahead of the Trends
Gatsby Investment is a real estate syndication company that specializes in unique deals with high return potential. We make it easy to invest in real estate developments, including many of the investment types referenced in this article.
Since being founded in 2016 through 2024, Gatsby has provided average annualized returns of 22% for investors, outperforming the market and proving that our systems work!
Our dedicated investor relations specialists are happy to provide additional investment guidance and answer any questions you may have about real estate syndication. Simply schedule a time to chat with an expert about your investment objectives and leverage our experience to stay ahead of the trends in 2025 and beyond.