Lessors of Residential Buildings NAICS 531110

Apr 17, 2025 - Tariffs Could Benefit Apartment Landlords

• Apartment owners may benefit from the timing of the Trump administration’s tariff regime, according to The Wall Street Journal. In 2023 and 2024, more than 1.1 million new multifamily units came online, the largest apartment boom since the 1980s, according to Yardi Matrix. The resulting oversupply suppressed rent growth, and high interest rates further hindered new development. Landlords expect the flood of apartment supply to be mostly absorbed by the end of 2025 and anticipate annual rent growth of up to 5%. Tariffs are also increasing building materials prices, which could further reduce the appetite for multifamily developments. Tariffs and the resulting economic uncertainty, combined with high interest rates and a lack of affordability in the single-family market, may also keep people renting longer.
• National average apartment rent increased 1% in March 2025 compared to the same month a year earlier, according to Yardi Matrix. Single-family rent growth was flat over the same period. Rent increases so far in 2025 have been below historical averages, not including the post-pandemic boom in rent growth. While economic uncertainty, employment concerns, and immigration reform pose potential headwinds, Yardi reported that apartment investors are optimistic and multifamily capital markets have sufficient liquidity.

• In April, Morgan Properties, one of the largest privately owned apartment operators in the US, agreed to pay $501 million for 11 multifamily properties in the Midwest with more than 3,000 units, according to The Wall Street Journal. The Midwest is undersupplied in apartment housing, and Morgan is betting that tight supply and an uptick in regional employment in key sectors, including manufacturing, logistics, and education, will create opportunities for rent growth. The Midwest has become undersupplied in recent years as developers have focused on areas such as the Sunbelt, which has seen populations balloon.
• A lack of affordability in the new, single-family home market could keep some would-be homebuyers in the rental market. In 2025, nearly 75% of US households are unable to afford a median-priced new home, according to the National Association of Home Builders. Given a median new home price of $459,826 and a 30-year mortgage rate of 6.5%, more than 100 million US households are priced out of the market. In 23 US states and Washington DC, more than 80% of households cannot afford a median-priced new home, suggesting a significant discrepancy between home prices and household incomes.