How Job Losses Are Affecting the Multifamily Sector

By Anuradha Kher, Online News EditorNew York–The number of unemployed persons has increased by 787,000 to 14.5 million in May, and the unemployment rate rose to 9.4 percent, the U.S. Department of Labor’s Bureau of Labor Statistics reported recently. The number of long-term unemployed (those jobless for 27 weeks or more) increased by 268,000 over the month to 3.9 million and has tripled since the start of the recession.With the apartment market firmly dependent on employment and household creation, this news does not bode well for multifamily owners. Even though the number of jobs being lost is decreasing, it could be a while until demand becomes healthy again. Meanwhile, the student housing sector faces mixed consequences from the job losses.“On the one hand, more people go to school in down time, and on the other, parents tighten their budgets due to which students double up or stay at home, neither of which they would have done in good times,” John Preiss, vice president of business development at the Preiss Company, tells MHN. “There is a bunch of moving parts that influence demand for student housing. At a time like this, apartments owners/managers are providing several concessions, and students are of course going to take advantage of them. So we want the apartment market to be healthy.”Even with the unemployment rate being as high, Preiss says that numbers for his properties look pretty healthy. “In terms of occupancy, leasing and demand, we are strong. With no new additional supply of apartments coming in, demand at our communities remains fairly healthy,” says Preiss. “There are some factors that are good and others that are not. Rents across many of our properties have reduced 5 percent or in some cases have remained flat.”Preiss isn’t worried about the next few years either. He says enrollment is trending upward. Kelly Hughes, vice president of operations for Alliance Residential, says the jobs losses have had an impact on the way her company manages properties. Like most owners/managers, Alliance is offering a lease assurance program that allows its residents to sign out of the lease if they lose their jobs. “Even though people are looking, they are taking a longer time to decide due to the anxiety about the job market,”  Hughes tells MHN. “Leases are down in general but flattened in February and March, and then there was a spike in April and May,” she adds.