Key Takeaways
- Why lower rents don’t always mean homes are affordable
- The real reason so many people still can’t afford rent
- How this situation keeps rental demand high
- Why now could be a great time to invest in real estate
- The impact of unaffordable housing on how people live
- Ways to turn a housing problem into a smart investment
Why This Matters to You as a Homeowner-Investor
If you’re in your 30s or 40s and own a home, you’ve probably started thinking about what’s next—especially when it comes to building wealth. You may have noticed headlines about falling rents and wondered if now’s the right time to invest in real estate. After all, if rent prices are dropping, doesn’t that mean housing is becoming easier to afford? Not exactly.
Yes, rents are slightly lower in some cities, but they’re still miles above what people were paying before the pandemic. At the same time, wages haven’t kept pace, and many renters simply can’t qualify for a mortgage. That means more people are staying in — or being pushed into — the rental market, which keeps demand up, even when prices dip.
This is where opportunity meets purpose. As a homeowner, you already value what it means to own your space. Now you have the chance to offer that stability to renters—and get paid while doing it. With housing harder to access than ever, investors like you can step in with well-kept, fairly priced rental properties that people truly need. This blog walks you through the current market and shows how you can take part in the solution while setting yourself up for long-term financial growth. Let’s take a deeper look.
The Illusion of Falling Rents
You might’ve heard that rents are finally coming down. Realtor.com even reported a 3.7% drop from the peak in 2022. Great news, right? Not so fast. That tiny drop doesn’t erase the huge jump we’ve seen since the pandemic. Renters are still paying far more than they did just a few years ago—often with no raise to match.
The truth is, a slight dip in rent doesn’t mean things are suddenly affordable. Wages have stayed mostly flat, even as prices soared. And while rent might not be climbing quite as fast, it’s still way too high for a large portion of the population. In fact, many households are spending upwards of 30% to 50% of their income just to keep a roof over their heads.
So what does this mean for you, the investor? It means demand isn’t going anywhere. People still need housing, even if prices cool slightly. Especially in urban areas where high living costs are the norm, you’ll find plenty of renters looking for clean, stable, and affordable places to live. If you’ve been considering buying an investment property, now might be a better time than you think. Despite the headlines, the need—and opportunity—is still very real.
The Deepening Shortage of Affordable Housing
Here’s a reality check: millions of people can’t find a place they can actually afford to live. The U.S. is short around 7.1 million affordable rental homes, according to a 2025 report from the National Low Income Housing Coalition. For every 100 low-income renters, only 35 have access to housing they can reasonably pay for. That leaves a lot of people scrambling—and sets the stage for long-term demand.
This shortage didn’t happen overnight. It’s the result of years of underbuilding, rising construction costs, local zoning rules, and lack of political will. All of that has created a serious mismatch: skyrocketing need and too few places to rent. When the supply is tight like this, demand stays high—and that’s excellent news if you own property.
For homeowner-investors, this tough situation brings an upside. If you offer well-priced housing in safe, livable areas, you’re going to attract renters. And not just that—you’ll likely keep them. Long-term tenants, steady rental income, and increasing property values make for a solid investment combo. It’s not about luxury units; it’s about smart, functional properties that people can afford and want to stay in. There’s an opportunity here to build wealth while actively helping solve a problem. That’s a rare win-win.
Renters Under Pressure
According to Royal LePage’s 2025 survey, 15% of renters in Canada spend more than half their income on rent. Another third are using up to half of what they make just to keep a roof over their heads. That’s not sustainable. With so much money going to rent, people are cutting back on food, skipping doctor visits, and saying no to major life plans.
It’s not just a Canadian problem. In the U.S., similar trends are popping up. Reports from Harvard’s housing center and the NLIHC show that millions face the same pressure. For many, renting isn’t just difficult—it’s overwhelming. And that stress is forcing people to delay marriage, children, and homeownership altogether.
If you’re already a homeowner, this information should hit close to home. But it’s not just cause for concern—it could also be your cue to get involved. Owning a rental property means more than collecting rent checks. It’s a chance to provide much-needed relief to people navigating a broken system. Creating housing that’s safe and fairly priced isn’t just a decent thing to do—it’s smart. As demand for affordable rentals rises, so does the potential for stable income and asset appreciation. This is where profit meets purpose, and it’s right in front of you.
The Shift from Buying to Renting
Buying a home used to be the goal for most families. But now, that’s becoming harder to achieve. The average home in the U.S. costs over $412,000, according to a recent report by the Joint Center for Housing Studies. Add in high interest rates, limited listings, and tight credit, and more people are stepping away from the idea of homeownership—for now, at least.
As a result, the rental market’s heating up. Prices might’ve dropped from pandemic highs, but they’re still well above pre-pandemic rates. Many would-be buyers are stuck. They can’t afford to purchase, yet still need a place to live—which means they rent. And when more people are entering the rental market, homeowners who invest in rentals are in a strong position.
That’s where your advantage comes in. If you already own a home, adding a rental property to your portfolio makes sense. With more renters than ever before, chances are good that your unit will stay full. And as demand increases, so could rent prices and your property’s value. You don’t have to be a big developer or have deep pockets. Even a single, reasonably priced property in a good area can bring in reliable income for years to come.
Why Building Has Slowed
One of the less obvious drivers behind the housing crunch? Building delays. Rising construction costs and tariffs on materials like steel and aluminum have slowed development. Fewer homes are going up, which keeps the pressure on the rental market. Builders are cautious, and that shortage of new units makes good rental housing even more valuable.
According to data from Rentec Direct and Realtor.com, supply chain snags have made everything from windows to appliances more expensive and harder to get. That means projects take longer or get canceled altogether. So while fewer homes are being built, demand from renters hasn’t really dipped. Naturally, that lifts the value of the homes that are already on the market.
What does that mean for you as an investor? If you already own property—or pick one up soon—you’re sitting in an increasingly valuable spot. And while new construction will eventually pick up, the effects of these slowdowns will be felt for years. The key now is to focus on well-maintained homes in areas where people want to live and work. With these kinds of external factors at play, your existing property—or your next purchase—could become even more profitable over time.
Six-Figure Incomes Just to Rent
You used to need a six-figure income to buy a home in a big city. Now? You might need that just to rent. Zillow reports that the number of metro areas requiring $100,000+ in income to afford rent has doubled. And this isn’t just a coastal problem—it’s spreading to smaller and mid-sized cities too.
This shift is squeezing the middle class. People who used to own homes are renting. People who used to rent comfortably are now stretching their budgets. And for investors, that points to one thing: growing, widespread demand for rental housing across a much larger map.
If you’re thinking about where to buy next, don’t look only at the big cities. Mid-tier markets and suburban areas—where wages still support market-rate rent—are gaining momentum. People are willing to move farther out if it means affording the basics. As a homeowner-investor, your job is to follow the people. Pick areas with jobs, schools, and transit, and you’ll likely find strong demand waiting.
Smaller Homes, Bigger Demand
Builders are changing course. Faced with rising costs and shifting demand, they’re scrapping luxury extras and focusing on what people really want: homes that are affordable, functional, and located where work and life happen. According to the Joint Center for Housing Studies, new builds are trending smaller—with fewer frills and reduced amenities.
Think fewer pools and rooftop decks. Think more open layouts, energy-efficient appliances, and access to transit, schools, and grocery stores. It might not sound flashy, but this is exactly what today’s renters are looking for. Simple, well-built housing that fits their budget and lifestyle.
For investors, this shift is golden. Smaller, practical units are faster to fill and easier to maintain. Families and working professionals aren’t chasing luxury—they’re looking for stability. If you’re investing, think less about building the “nicest” property and more about building the “right” one. Whether it’s a duplex in a solid neighborhood or a starter unit near a commercial area, these kinds of homes are hot commodities. And they’ll stay that way, especially as more people choose renting over buying by necessity—or preference.
Why More People Are Choosing to Rent
Not long ago, renting was what you did while saving to buy. Today, it’s often the plan for the long haul. A growing number of renters aren’t just waiting to buy—they’re deciding not to. A Royal LePage study reveals about one-third of Canadian renters have no plans to own a home.
Why? It’s not always money. Sure, down payments are daunting, but it’s also about lifestyle. Renters appreciate flexibility. They can relocate for a job, skip property taxes, and avoid the cost and stress of maintenance. For some, the freedom renting provides outweighs the draw of ownership.
That means more people will stay renters by choice, not just because they have to. For you, that’s an important change to understand. Long-term renters are often more reliable tenants. They’re rooted, they want stable leases, and they’re often willing to pay for safety, cleanliness, and peace of mind.
If you’re thinking about investing in real estate, keep this in mind. It’s not just about demand—it’s about renter loyalty. Well-managed units in well-located areas will stay in demand. And unlike a booming trend, this one looks like it’s here to stay.
Turning Crisis into Opportunity
Right now, the housing market is complicated. Rent prices might be dropping on the surface, but affordability hasn’t really improved. In reality, most renters still face major pressures—and middle-class families aren’t immune. At the same time, new construction is slowing down due to high costs and supply issues, making the homes already on the market more valuable.
Meanwhile, more people are being pushed out of buying a home and into long-term renting. That population—people with solid jobs but shrinking options—is growing. And wherever there’s demand, there’s room for investment.
If you own a home, you’re already ahead. You understand how to manage property. Adding a rental unit, whether it’s an extra home or a basement suite, can create income flow while offering much-needed housing. This is about more than profits—it’s about smart, responsible investing that meets a real need.
So, when you think about your financial future, ask yourself: Do you want to build wealth just for the sake of it—or do you want to create something that helps people, too? The answer could shape your legacy in more ways than one.
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