Electricity prices increased across more than 30 states in 2023 and 2024. Renters in high-cost metros are now moving to cities with lower or more stable utility bills. This shift is reshaping rental demand, rent growth, and retention patterns in ways investors can act on today.
Why Are Utility Rates Reshaping Real Estate Demand in 2025?
Electricity rates rose across more than 30 states between 2023 and 2024, according to the U.S. Energy Information Administration. In states like California, Arizona, and New York, rates increased between 8 and 14 percent in a single year.
Renters feel these increases immediately. As utilities become a larger share of a renter’s total monthly cost, many are shifting to markets where energy remains stable. These moves are changing rent growth patterns, absorption trends, and property performance.
For investors, energy affordability is no longer a footnote in market analysis. It is a leading indicator of where renters, and returns, are moving.
Which Markets Are Benefiting From Stable Utility Costs?
Multiple metros with flat or below average utility costs are now outperforming national rent growth averages.
Examples from 2023–2024 data:
| Market | Rate Trend | Rent Growth | Why It’s Rising |
|---|---|---|---|
| Columbus, OH | Low, steady | 5.4% | Affordable utilities + job growth |
| San Antonio, TX | Mild increase | 4.8% | Cost-driven migration from Austin |
| Raleigh, NC | Steady | 6.1% | Strong tech job inflow + cheap utilities |
| Tampa, FL | Slight increase | 6.3% | Cheaper overall household energy costs |
Investors typically analyze wages, jobs, and population. But the data shows that utility affordability is acting as an independent rent growth catalyst.
How Do Renters Make Decisions When Energy Costs Rise?
NMHC research shows that 62 percent of renters now rank utility cost as a top deciding factor, more important than amenities, finishes, or building age.
Renters are asking:
- How predictable are my monthly expenses?
- Will high electricity rates make total rent unaffordable?
- Does this building have energy efficient features?
Properties that reduce tenant utility bills outperform on renewal rates and vacancy loss. This trend is national and accelerating.
How Can Investors Screen Markets by Energy Affordability?
You can use existing public tools to filter markets in under 10 minutes.
Start with these free data sources:
1. EIA Electricity Rate Tracker
Shows state-level and metro-level energy prices and trends.
https://www.eia.gov/electricity/data.php
2. Utility Rate Maps from Local Providers
Many utilities publish multiyear forecasts and rate histories.
3. NMHC Renter Preferences Data
Helps match utility affordability to renter behavior.
https://www.nmhc.org/research-insight/quick-facts-figures/
Screening steps
- Identify metros with flat or stable rates over the last 3 years.
- Compare rent growth against these rate trends.
- Flag markets where renter demand is tied to household affordability.
- Map your acquisitions to these stable-rate markets.
This process reveals high performing secondary cities most investors overlook.
What Can Owners Do Today at Existing Properties?
You can improve rent competitiveness and retention without major capex.
Simple steps that lower tenant utility bills:
- Install smart thermostats (costs $80-$120 per unit).
- Conduct an ENERGY STAR Portfolio Manager benchmark.
- Seal envelope leaks and upgrade weather stripping.
- Install LED lighting in common areas.
- Tune HVAC units for efficiency.
Even small measures can cut tenant electricity bills by 10-20 percent, which improves retention and strengthens NOI.
How Does Energy Affordability Influence Property Value?
Value growth is tied to both demand and operating performance.
Observed correlations from past 3 years:
- Markets with stable utility rates saw 4-7% higher rent growth.
- Energy efficient buildings renewed tenants at 3-5% higher rates.
- Lower energy costs reduce turnover expenses by $1,000-$1,800 per turn.
This is why institutional buyers increasingly request energy cost benchmarking during due diligence.
Which Markets Are Poised for Growth in 2025?
Based on stable rate trends and strong renter inflow, the following markets stand out:
- Columbus, OH
- Indianapolis, IN
- San Antonio, TX
- Raleigh–Durham, NC
- Tampa, FL
- Jacksonville, FL
These are markets where stable utilities intersect with population growth and employer expansion.
