The Role of Employment Rates in Housing Demand

As we move toward the end of 1Q, the apartment industry data providers with the closest-to-real-time info are reporting occupancy rates basically unchanged from late 2024 results. That’s good news, as it means demand did not falter drastically in what is normally a period of seasonally slow leasing.   Looking ahead to the warmer weather months – typically the busiest leasing time frame – product absorption probably will prove solid viewed relative to the past norm, even though it’s unlikely that 2024’s near-record demand tally can be matched.   Here are some influences expected to impact rental demand in total and by product price point during the near term.   Job Gain: Employment production and resulting household formation are the building blocks of housing demand. Evidence of a slowdown in the pace of job expansion is mounting, but – for the moment, at least – most economists still are calling for employment base growth. Just a few forecasters are expecting a recession.   Keep an eye on job additions by industry, which have been shifting notably over the past couple of years. Middle income employment sectors now register more performance momentum than their high paying counterparts. Job growth spread across industries can boost total apartment demand and especially support absorption of units at the middle-tier price point.   Home Purchase Challenges: Near-term headwinds for would-be homebuyers will keep many households in the rental market, enhancing prospects for more expensive Class A apartments even if job gain in high wage sectors proves lackluster. Estimates of the monthly cash outlay premium to buy today’s typically priced home versus rent the average apartment register at nearly $1,200, according to calculations from Marcus & Millichap. That math likely won’t shift much just ahead, given 1) home prices continue to rise, and 2) mortgage interest rates generally aren’t expected to come down very quickly.   The I Words – Immigration and Inflation: While border crossing stats suggest that immigration returned to a relatively normal level in 2024, there were a couple of recent years when the numbers reached double to triple past volumes. These newcomers boosted housing demand generally and helped keep lower price point Class C apartments full in some areas. Quick deportations could wipe out that demand. Furthermore, if inflation kicks up again, the lowest priced properties could face some difficulties with attracting renters and collecting owed rent payments. That scenario is possible if labor shortages created by deportations drive up worker costs in some industries and/or if tariff costs passed on to the consumer push the prices of an array of goods.   #LeaseLock #DataDriven #apartments #rentals    

📊 Uneven Labor Market Trends & What They Mean for Housing The latest Bureau of Labor Statistics data shows that U.S. unemployment stands at 4.1% (June 2025), but the picture looks very different depending on where you zoom in: Lowest unemployment: South Dakota (1.8%), North Dakota (2.5%), Vermont (2.6%). Highest unemployment: Washington D.C. (5.9%), California (5.4%), Nevada (5.4%), Michigan (5.3%). For those of us in residential real estate investment and development, this unevenness matters. Labor market health directly impacts: Rental demand & absorption: Stronger employment in certain Midwest and Mountain states often translates into more stable occupancy. Affordability pressures: Higher unemployment in markets like California or D.C. could soften short-term rent growth, but also create opportunities for thoughtfully priced housing solutions. Long-term resilience: States with consistently low unemployment may signal healthier local economies and stronger household formation trends. As developers and investors, it’s important that we balance financial performance with the real housing needs of communities. While lower unemployment markets may look like safe bets, higher unemployment areas might be where innovative, affordable, and workforce housing solutions can have the greatest impact and also unlock long-term value. ➡️ What markets are you seeing as most resilient in today’s labor landscape? #RealEstateInvesting #ResidentialDevelopment #MultifamilyHousing #HousingMarket #EconomicTrends #UnemploymentRate #MarketInsights #RealEstateInvestors #CommunityImpact #HousingDemand

Early 2025 is painting a clear picture for multifamily real estate—and it's one of quiet resilience. Vacancy rates have fallen to 5%, the lowest in over two years, as renter demand has outpaced new supply by a significant margin. In Q1 alone, 147,000 units were absorbed, far exceeding the 116,000 units delivered. This shift is happening as developers slow their pace and renters return in force, driven by a combination of economic and demographic forces. What’s fueling this demand? A labor market that’s still holding firm. Despite broader economic uncertainty, employers added over 220,000 jobs recently, and unemployment remains low at 4.2%. For real estate investors, that’s meaningful—because job growth tends to go hand-in-hand with rental demand. And let’s not forget the long game. As millions of Gen Z adults begin forming households and Millennials remain in their prime renting years, we’re looking at a built-in base of renters that could sustain demand for years to come. So while headlines may focus on interest rates and volatility, the fundamentals of multifamily are quietly reminding us why this asset class remains a pillar in the real estate world. #cpicapital #wealthbuilding #realestateinvesting #multifamilytrends #housingmarket2025 #rentaldemand #passiveincome