THINGS ARE LOOKING UP. Despite today's large excess inventory of apartments, the upcoming wave of Gen Y renters, coupled with the dearth of new construction in recent years, is expected to shift the balance over the next few years enough to get effective rent growth back to the plus column. Perhaps strongly so.

But the recovery could be delayed by the fact that this “Great Recession”—the longest-lived recession since the 1930s— has been disproportionately tougher on younger workers. Apartment demand is based on a foundation of jobs, and continued high unemployment rates for younger people, who are the most likely to rent, could temper the strong demographics the industry is counting on. After all, younger workers are generally hit harder by recessions than older workers, and that has been the case even more so in the current downturn.

The Employment Picture

The overall national unemployment rate rose to a high of 10.1 percent in October 2009, a full 5.1 percentage points higher than December 2007. Though this is not the postwar high unemployment figure—that would be 10.8 percent reached during the 1981-82 recession—it is the greatest increase in the unemployment rate since World War II.

The employment picture for the 16- to 24-year-old demographic is uniformly worse. Their unemployment rate increased by 7.4 percentage points from December 2007, reaching 19.2 percent in October 2009—a postwar record. This demographic has lost 2.8 million jobs since December 2007. A telling statistic: They account for one-third of the total job loss even though young workers made up less than one-seventh of those with jobs at the peak. This dramatic 14.1 percent drop in youth employment [since December 2007] is more than double the economy's overall employment decline of 5.7 percent.

Furthermore, young workers are more likely to have been unemployed for a longer amount of time. Almost one in five workers who has been unemployed more than 26 weeks is between the ages of 16 and 24—a disproportionately large share.

The Shape of the Recovery

In the past, steep job losses have often been followed by rapid job growth when the economy rebounds—the so-called “V-shaped” recovery in which the economy rebounds as quickly as it dropped. This time, however, a much slower, more gradual “U-shaped” recovery seems more likely. (Let's hope we avoid the dreaded “W-shaped” recovery, such as followed the Great Depression.) Why? For one thing, that has been the pattern in the two most recent recessions, and it's not obvious that anything important has changed.

Beyond that, there is considerable evidence that recoveries following serious financial crises are slower and weaker than recoveries from more typical cyclical downturns of the business cycle. Since the size and scope of the current downturn resulted from a global financial crisis rather than a cyclical contraction, a slow, weak recovery would seem to be the most likely path ahead. Yet, the experience of the previous two economic recoveries would suggest modest reason for optimism. The 16- to 24-year-old bracket got jobs at a rate slightly faster than the average.

The bottom line: It's anyone's guess as to how quickly Gen Yers will find jobs. In an “employers' market,” it is possible that younger, less experienced applicants will be at a disadvantage because they'll be competing with more experienced employees. Alternatively, the fact that younger workers tend to cost employers less in wages and, especially, in benefits may give them the edge when employers look to expand their payrolls again.

If the job market can just do its part, today's excess inventory could be worked off quickly. Economic recovery, demographic trends, and the lack of new supply should reverse the current supply-demand imbalance. Even if the recovery turns out to be slow, that would only postpone—not cancel—the positive demographic forces.

MARK OBRINSKY is vice president of research and chief economist for the National Multi Housing Council in Washington, D.C.