Is Real Estate a Good Investment In 2025?

Everyone talks about how real estate is the “safe bet.” But is that still true in 2025? After all, prices have shifted. Rates have climbed. Some cities are booming, while others are cooling off. And in the middle of all that, you’re left wondering: Is real estate a good investment? Or could it backfire?

Before you make your move, let’s unpack what’s really happening in the market—and what it means for you. Read along to get the full picture and figure out whether real estate still deserves a spot in your 2025 plans.

Main Takeaways

• Real Estate Remains a Strong Investment—With Caveats: Despite rising mortgage rates and economic shifts, home values continue to appreciate in many regions, while growing inventory gives buyers more options and negotiating power.
• Investment Type Matters: Residential real estate offers stability and affordability for first-time investors, while commercial properties bring higher returns but require greater capital and expertise—choosing the right asset is key to success.
• Market Conditions Vary by Location: Cities like Baltimore and Northern Virginia show resilience due to strong job markets, making them prime spots for investment, whereas slower markets may require a more strategic approach.

Real Estate Market Trends in 2025

To answer the big question—“Is real estate a good investment in 2025?”—we first have to look at the current market trends. Local property management companies in Baltimore will walk you through it.

Home Prices: Steady Growth with Regional Variations

According to Zillow, as of April 2025, the median home value in the US is $361,263. This might sound like a huge number. However, as you can imagine, prices actually vary widely by location. Take Baltimore for example.

As of early 2025, the average home value Zillow calculated for Baltimore is about $186,500, reflecting a 0.9% rise from last year. That’s good news for buyers—it means the market isn’t overly inflated, and you won’t feel like you’re jumping in at the wrong time.

A Market with More Options

Inventory is growing. The National Association of Realtors put the number of unsold houses in the US at 1.33 million in March, 8.1% higher than the previous month. Furthermore, they say that home sales have dropped 2.4% from the past year. So, while prices are still high, there are signs of that potentially slowing.

Speaking of slowing, properties are taking a longer time to sell than before. Realtor reports that homes are spending more time on the market—about 53 days now, compared to just 33 days last year. That gives buyers more breathing room to negotiate, while sellers might need to be a little more patient.

Sustained Demand and Rising Rents

Rental prices have dipped a bit across the nation. Zillow recounts that the average rental price in the US is $1,825 as of April 2025, which is around 15% less than last year. However, again, that’s not necessarily a reflection of specific areas’ performance. For example, they also state that the average rental rate in Boston is $3,375, 3.03% up from last year.

Looking Ahead: What to Expect

Looking ahead, mortgage rates are holding steady around 7%. That definitely affects affordability, but it hasn’t stopped serious buyers. Many are still locking in deals before rates rise further.

As for the national economy, its state is admittedly uncertain, but many regional economies are thriving. For example, bringing Baltimore up again, its job market is anchored by healthcare, education, logistics, and public service. That stability helps cushion the real estate market from national swings. If you’re investing for the long term, this kind of economic foundation matters.

Residential vs Commercial Real Estate Investment

To diversify our research on whether real estate is a good investment, we also need to look at the two main types of investment—residential vs. commercial properties. Which one would be more ideal for you? Let’s break it down:

Residential Real Estate Investment

Residential real estate includes various properties like single-family homes, apartments, condos, or even small buildings with up to four units. These are the kinds of properties most people are familiar with—and for many investors, they’re the first step into the real estate world. Here’s a quick look at the pros and potential downsides:

Pros	Cons
Lower upfront cost Easier to manage	Higher tenant turnover You handle most repairs and maintenance
Strong demand for housing	Growth potential may be slower
Easier to finance with traditional loans	May need several units to scale income
Good for first-time investors	Rent amounts can be capped in certain areas

Commercial Real Estate Investment

Commercial real estate includes properties like office spaces, retail shops, warehouses, and apartment buildings with five or more units. These types of investments often bring in more income compared to residential ones, but they also tend to be a bit more complex to manage. Let’s take a look at the upsides and challenges:

Pros	Cons
Higher income potential	Requires larger capital to get started
Longer lease terms = more stability	Vacancies may last longer during downturns
Tenants may cover expenses (via triple net leases)	More complex lease agreements and property oversight
Professional tenants = fewer maintenance calls	Financing is stricter and more paperwork-heavy
Great for portfolio growth and diversification	Often needs professional property management

Pros and Cons of Real Estate Investing in 2025

Real estate continues to be a good real estate investment choice in 2025, but like any investment, it comes with its own set of advantages and challenges. Here’s a straightforward breakdown to help you decide if it’s the right path for you.

Pros

Steady Income Stream:

Renting out properties can give you a consistent monthly income, especially in areas with high demand. This predictable cash flow can help you cover countless things. To name a few, it can help you pay for mortgage payments, maintenance costs, and other financial obligations.

Property Value Appreciation:

Over time, real estate often increases in value. This lets you sell at a profit down the line. Well-maintained properties in desirable locations tend to appreciate faster. So, they tend to be a solid long-term investment.

Tax Benefits:

Investors can take advantage of tax deductions on mortgage interest, property taxes, and depreciation. These benefits can significantly reduce your taxable income. Overall, that can boost your financial returns even further.

Inflation Hedge:

As the cost of living rises, so can rental income. This way, you can maintain your purchasing power. Unlike fixed-income assets, rental properties offer you the flexibility to adjust rent prices. So, you can keep pace with economic shifts.

Control Over Investment:

Unlike stocks, you have direct control over your property. So, you can decide on renovations, rent, and management. This level of control enables investors to enhance property appeal, maximize occupancy, and optimize financial performance.

Cons

High Initial Costs:

Purchasing property requires significant upfront capital. For example, you need enough funds for down payments, closing costs, and potential repairs. So, you must have a significant amount of money stashed up.

Ongoing Maintenance and Management:

Being a landlord means handling repairs, tenant issues, and property upkeep. Needless to say, all this can be time-consuming. The good news is you can outsource these responsibilities to a reliable property management company.

Market Volatility:

Property values can fluctuate due to economic conditions. Then, that may impact the worth of your investment. So, you may want to hold your property until the time is right. 

Best Cities & Locations to Invest in 2025

When considering whether real estate is a good investment in 2025, it is essential to focus on areas with strong growth potential, high rental demand, and favorable economic conditions. Our property management company has pinpointed these areas as especially promising: 

Baltimore City & County, MD: Baltimore is an evergreen hotspot for investors. With affordable entry points, strong rental demand from students and healthcare workers, and ongoing revitalization projects, it’s ideal for both new and experienced landlords. In particular, it’s a great option for long-term buy-and-hold and value-add properties.

Montgomery County, MD: Montgomery is of the wealthiest counties in Maryland. It offers a high-income tenant base, high-rated schools, and proximity to D.C. Although the home prices are often higher, so is your profit potential. It’s ideal for those looking for stable, long-term tenants.

Prince George’s County, MD: This area is experiencing rapid growth. In particular, it has strong development concentrated around the Blue Line Corridor and major transit hubs. Also, it tends to be more affordable for tenants compared to Montgomery, but with similar access to D.C. This balance makes it fantastic for appreciation and commuter rental properties.

Washington, D.C: The D.C. rental market never sleeps. And since the government and nonprofit sectors are bustling there, you can enjoy higher demand, even during downturns. In particular, we’ve seen multi-family and high-end rentals thrive in this area, so that’s something to consider. 

Northern Virginia (Arlington, Fairfax, Alexandria): With Amazon HQ2 nearby, this region is booming. Rents are strong, and tech professionals, federal workers, and defense contractors have high demand for rentals. In particular, our team there has watched a large market grow for upscale ones. 

Ready to Take the Next Step? Get Started Today!

Baltimore’s real estate market in 2025 is showing real promise—with steady price growth, more inventory on the market, and renters still lining up. So, yes—real estate can still be a good investment. But like any smart move, it’s all about how you manage it. The risks are real, but they’re manageable. And you don’t have to face them alone.

At Bay Property Management Group, we help take some of the pressure off. From finding qualified tenants to handling repairs and staying ahead of local laws, we’ve got your back. We can help you make your property into a more passive investment, not a full-time job. Contact us today to simplify your investment.