Employment numbers released by the U.S. Labor Department on May 4 point to a slow but steady labor market that multifamily pundits say is all well and good but could use some slight improvement to help guarantee both short- and long-term industry health. While the nation added only 88,000 new jobs in April—the fewest since November 2004—unemployment still continued to hover around a five-year low of 4.5 percent (unemployment in March reached 4.4 percent). The stability in employment numbers, however cool, likely point to a economy on a modest track to recovery.
“As long as the economy continues to generate a moderate or better amount of jobs, it looks the apartment market will continue to see the kind of demand it needs to do well,” says NMHC chief economist Mark Obrinsky. “Things have really turned around from the situation four years ago, when everything seemed to be going the wrong way. Now, things seem to be going the right way,” Obrinsky says, adding a cautionary note that the first quarter gross domestic product was just 1.3 percent. “I'm not predicting a recession, but it makes us more vulnerable. If by chance the economy does shift into recession, it is going to change the outlook.”
Still, macroeconomics continue to favor a rental market that struggled against for-sale residential for years. “The perfect storm from 2001 to 2005, where interest rates drove people to homeownership and the demographics were also not renter-friendly, is over,” says Chris Finlay, managing principal for capital markets and operations at Mission Residential.