Mortgage rates stuck in the mid-6% range, a wave of “accidental landlords,” and a widening gap between tenant-friendly and investor-friendly states — here’s what three real estate experts predict for next year’s rental market.
Heading into 2027, markets that are building and staying open to investors, flat-to-falling prices and rate-arbitrage opportunities are creating room for landlords to grow. In cities where rent freezes and tenant-protection laws are tightening, capital is pulling back and maintenance is suffering. Three experts are breaking down what’s actually driving the market and who stands to win or lose.
Prices Go Flat, But Affordability Stays the Real Story
Seamus Nally, CEO of Denver-based TurboTenant, expects 2027 to bring a modest pullback in home values nationwide, driven by rates holding steady and supply finally catching up. Federal and state efforts to loosen housing regulation, including new tools under the 21st Century ROAD to Housing Act taking effect in early 2027, will add inventory in markets where local governments follow through, easing bidding wars and pushing prices sideways or down in places that lean into building.
Matt Krueger, a Des Moines-based investor who manages 12 rental units with his wife, says that shift has already been reshaping how he finds deals. Years ago, he notes, it wasn’t hard to find a property that cleared the 1% rule — buy for $150,000, rent for $1,500 — but “that’s become significantly harder as home prices have increased much faster than rents.” The Rise of the “Accidental Landlord”
One of the more unusual trends Nally points to for 2027 is the continued growth of what he calls accidental landlords, homeowners who bought a new primary residence while holding onto a 3-4% mortgage on the old one, turning it into a rental almost by default. Roughly half of outstanding mortgages still sit at 4% or below; Freddie Mac’s 30-year rate has hovered in the mid-6%s, and Zillow has reported that about 2.3% of homes listed for rent had recently been listed for sale, which is near a six-year high. As Nally puts it, these owners “did not set out to be landlords. The math pushed them there,” and in 2027 many will realize that holding onto a 2010s-era mortgage while renting at today’s rates is “juicy interest-rate arbitrage.”
A Widening Policy Divide
Not every market will benefit equally. Nally singles out cities where Democratic Socialist-aligned politics are shaping rental policy as a warning sign for landlords, pointing to New York’s rent freeze for roughly a million stabilized units for the 2026-2027 lease year as “the clearest warning light,” on top of years of operating costs outpacing allowed rent increases.
Ashley Kehr, a Buffalo, NY-based investor and host of BiggerPockets’ Real Estate Rookie podcast, sees the same tightening playing out firsthand. She recently went through an eviction for a tenant who hadn’t paid in four months and didn’t contest the case, yet the process still dragged from mid-May to early September 2026. She points to a broader pattern of tenant-friendly states getting stricter, citing New York’s Good Cause Eviction law, Washington’s statewide rent control, California’s appliance mandates, and Virginia’s required payment plans for back rent as recent examples, and expects more states to follow suit in 2027.
Independent Landlords vs. Large Operators
Despite the regulatory headwinds, both Krueger and Kehr think smaller, hands-on landlords are positioned to outperform large operators in 2027. Krueger credits flexibility: he raises rent only every two years, and his average single-family tenant stays around six years. He recently gained a new fourplex tenant who left a large property management company after months of unaddressed mold and water damage, telling Krueger, “We specifically chose to rent from you because you’re involved and clearly keep up on the quality of my rentals.”
Kehr sees it playing out differently among large operators who overpaid during the market peak and banked on refinancing at lower rates. She notes that “many large operators who syndicated during that time are seeing losses,” while investors who stabilized their properties before 2020 are better positioned to ride out the current market and find good deals.
Tenant Expectations: More Tech, More Friction
Convenience will keep driving tenant expectations in 2027 such as online rent payments, digital leases, and fast communication. Both Krueger and Kehr point to a more complicated undercurrent: AI cutting both ways. Krueger has already seen burned-out landlords sell off their portfolios rather than keep managing properties themselves, a shift he’s offset by using tools like TurboTenant for leasing, screening, and rent collection alongside contractor relationships that “saved me a ridiculous amount of time.”
Kehr sees tenants increasingly running lease agreements through AI to “find loopholes” or draft legal threats citing specific statutes, while more landlords, even small ones, lean on AI for 24/7 tenant communication, sometimes to tenants’ frustration when the responses lack a human touch. On pricing, Kehr expects concessions to fade as the market firms up in 2027, and predicts landlords will increasingly roll fees into base rent rather than itemizing them, inflating headline rent growth even as tenants’ total costs stay flat.
The Bottom Line for 2027
The throughline across all three experts: location will matter more than ever. Markets that build housing and stay open to investors will offer real opportunity for landlords willing to get creative with financing and renovation. Markets that double down on rent control and landlord restrictions will see capital pull back, maintenance quality decline, and both tenants and landlords lose options even as independent, hands-on operators continue to outperform larger, less responsive competitors wherever they operate.
