Apartment Demand Flourishes; Strong Employment Gains Boost Household Formation
Via Marcus & Millichap
Maturing employment cycle supports apartment demand.
Steady hiring since the end of the recession has lifted apartment demand more directly than other commercial property types. As job formation, rising consumer confidence and modest wage growth take hold, apartment demand drivers will maintain momentum. The employment to population ratio for the prime rental cohort, ages 25 to 34, has reached a 15-year high, a particularly encouraging threshold.
Household formation has grown rapidly as economic advancement has supported de-bundling, and young adults have increasingly begun to move out on their own. This broadening growth, together with a tighter unemployment market, will ultimately intensify wage pressure and thereby underpin additional rent gains. The trend has already emerged in the strongest employment markets, but it is migrating to secondary and tertiary metros as the economic momentum spreads.
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