Rent and Operating Trends Week of October 9th

The employment market may finally be catching up with the rest of the economic slowdown, as the September jobs report missed estimates. While 263,000 new jobs were added to the economy, estimates called for 275,000. The unemployment rate dropped to 3.5% but the decline was due to a lower labor force participation rate, another sign of potential weakness in the job market. Employment remains the strongest aspect of the economy, but it may be losing its shine, which would align with the weakness seen across the broader market. The tech-heavy NASDAQ hit a two year low on Monday, and other major equity indices continue to trade lower. Interestingly enough, softer job growth could indicate to the Fed that their monetary tightening is working and may lead to slower interest rate increases down the road. The more significant indicator however will be the September CPI number, set to be released on Thursday.

Apartment fundamentals remain on the slow and steady downward trajectory that has been common for the past few months. In the wake of Hurricane Ian, Florida and Carolina markets saw traffic fall significantly last week. Tampa, the closest major market to where the storm came ashore, saw traffic fall by nearly a full tour per property last week, the largest decline of any of the top 30 metros. Jacksonville, Charleston, Orlando and Miami all saw traffic drop precipitously last week. Similar to past destructive hurricanes, I expect demand for apartments in areas severely impacted by the storm to increase in the coming weeks and months. Not only will people be looking for short term housing immediately, but multifamily properties have tended to endure severe weather better than single family homes.