Why Landlords Feel Squeezed Even as U.S. Rents Keep Climbing

Rent growth vs. inflation: the headline numbers

Recent federal data continue to show rent and shelter costs running hotter than overall inflation. NerdWallet reports that in the 12 months ending in September, rent in the consumer price index rose 3.5%, just below the broader shelter index at 3.6% and still above the overall inflation rate.[nerdwallet.com]

At the same time, private rental-market data suggests that the breakneck rent spikes of 2021–2022 have cooled. NerdWallet, citing Zillow, notes that typical U.S. asking rent in September was about $1,979 — down slightly from August but still 2.3% higher than a year earlier and roughly 35% above pre-pandemic levels.[nerdwallet.com] The pace of growth has slowed, but the starting point is much higher than it was five years ago.

Affordability remains stretched. Zillow estimates that a typical renter household now spends about 28.4% of income on rent and needs an income around $79,144 to comfortably afford the median rental.[nerdwallet.com] That leaves limited room for further rent hikes before households start doubling up, moving farther out, or pushing back in lease negotiations.

Why landlords say they feel squeezed

Given those numbers, it might be tempting to assume landlords are enjoying windfall profits. But many report the opposite: thinner margins and higher risk, even with nominal rents at record levels.

There are a few reasons for this disconnect. First, expenses have climbed quickly. Insurance premiums and property taxes have risen in many markets, while maintenance and labor costs remain elevated. For recent buyers or owners with variable-rate debt, today’s higher financing costs significantly raise the break-even point on a property, especially compared with acquisitions financed at the ultra-low rates of the early 2020s.

Second, effective rent growth is softer than headline figures suggest. NerdWallet highlights Zillow data showing that about 37.3% of September rental listings offered concessions such as a free month of rent — up from a year earlier in most large metros.[nerdwallet.com] Concessions help tenants manage high asking rents, but they also reduce landlords’ realized income, particularly in markets with substantial new supply.

Third, the boom-era expectation of constant double-digit rent growth has faded. Owners who underwrote deals assuming rapid annual increases may now find that slowed growth, combined with higher expenses, leaves less free cash flow than projected. Small landlords and highly leveraged investors are especially exposed when repairs hit or units sit vacant longer than expected.

Payment risk and the rise of rent tech

On top of expense pressure, many landlords say they are more worried about getting paid on time. A new national survey from RentRedi and BiggerPockets found that 41% of rental investors feel more concerned about tenants not paying rent than they did a year ago, even though 45% said they have not actually seen an increase in late or missed payments.[globenewswire.com]

The survey sheds light on how operations and technology shape outcomes. Across both landlords and tenants, automatic rent reminders and autopay ranked as some of the most effective tools for encouraging on-time payments. More than half of landlords said they rely on automatic reminders, and 41% said they offer autopay to encourage timely payment.[globenewswire.com]

RentRedi’s internal platform data underscores the impact: units with tenants enrolled in autopay achieve an on-time rent rate of about 99%, compared with 87% for units without autopay.[globenewswire.com] That 12-percentage-point gap can be the difference between predictable cash flow and constant collection headaches, especially for small owners who depend on rental income to cover their own mortgages or living expenses.

The survey also shows growing use of credit reporting as a carrot rather than a stick. Among landlords who offer incentives for on-time payment, more than 70% use rent reporting to help tenants build credit when they pay on schedule.[globenewswire.com] When combined with mobile payment options and reminders, these tools can align tenant and landlord incentives around consistent, predictable rent.

How tenant strain shows up in the data

While technology can ease collection, it does not erase the underlying affordability challenges. NerdWallet notes that, despite a modest improvement, rent affordability in September was still only the "best in four years" — a low bar after the rapid increases since 2020.[nerdwallet.com]

Zillow’s estimate that the typical household spends 28.4% of income on rent is close to the traditional 30% affordability threshold, but that average hides wide variation.[nerdwallet.com] Lower-income renters often spend far more, while those in the highest-cost metros face rent levels well above the national typical asking rent of $1,979.

The high base level of rents also matters. Even if annual growth moderates to around 2%–3%, renters are now paying that increase on top of a cumulative gain of more than 35% since before the pandemic.[nerdwallet.com] For households whose wages have not kept pace, that gap feeds financial stress, higher credit-card balances and more missed or late payments.

Concessions are another sign of this strain. Zillow’s data showing that more than a third of listings now come with some form of discount suggests that landlords, especially in markets with heavy new construction, are competing for qualified tenants.[nerdwallet.com] In effect, rent growth headlines can look strong even as effective rents flatten once freebies are accounted for.

Strategies for landlords in a tighter-margin world

For landlords and investors, the lesson is to look past the headline rent number and focus on total return and risk management. A few practical strategies emerge from the recent data and surveys:

• **Underwrite to effective rent, not just list price.** When analyzing deals, assume some level of concessions or vacancy in competitive markets, and model renewals at more modest growth rates than those seen in 2021–2022.
• **Budget for elevated expenses.** Build higher line items for insurance, taxes and maintenance into your pro formas, and stress-test deals against potential rate hikes or major repairs.
• **Leverage payment technology.** Tools like autopay, reminders and credit reporting can significantly improve on-time rent collection and reduce administrative work, as the RentRedi data shows.[globenewswire.com]
• **Invest in tenant stability.** Clear communication about renewals, fair but firm payment policies and small retention incentives can reduce turnover costs, which often rival a rent increase in impact on the bottom line.

What this means for renters

For renters, the current landscape is a mix of modestly improving leverage and still-high costs. Slower rent growth, more concessions and a bit more inventory in many markets give tenants more room to negotiate — especially on renewal terms or move-in incentives.

At the same time, the data underline how important it is to take a long-term view of housing costs. Because starting rent levels are so much higher than they were in 2019, even small annual increases can strain budgets. Using tools like rent-to-income calculations, budgeting apps and credit-building rent reporting can help renters decide when to stay put, when to negotiate and when it might be time to move.

The bottom line: rents are still rising faster than overall prices, but that doesn’t mean landlords are universally thriving. Rising expenses, payment anxiety and softer effective rents are squeezing many owners, even as tenants continue to devote a large share of income to housing. Understanding both sides of that equation is key to navigating the U.S. rental market heading into 2026.