The immigration cliff: How America’s population shift is quietly reshaping the rental market

For years, multifamily underwriting has treated population growth as a constant factor. However, that assumption has masked an important distinction: not all demand is created equal. Workforce housing demand and Class A housing demand are increasingly being driven by different forces. This divergence is becoming more visible in current data.

First-quarter data point to a market being shaped not only by oversupply, but by segmented demand, including shifts in immigration trends, rising delinquency pressure, and fresh uncertainty around construction costs. Yardi’s March national report said rent growth was just 0.1% year over year, the weakest March reading in its dataset, as “an ongoing supply glut” combined with “reduced immigration and slower job growth” created persistent headwinds.

RealPage’s first-quarter update adds “one of the strongest 1st quarter performances in the past decade.” But annual demand still totaled only a little more than 303,000 units, below the roughly 340,000-unit decade average. Occupancy stood at 94.9%, still below the year-earlier mark, and asking rents remained 0.5% below prior-year levels. Demand is showing up less reliably than many owners and developers had expected.

“Supply glut” has become a default explanation for almost everything happening in multifamily. Supply is absolutely part of the story, especially in high-delivery Sunbelt metros. But it’s not the whole story, a point HUD made in its 2025 Worst Case Housing Needs report. They noted that the “immigration-driven increase in households” has contributed meaningfully to housing demand and, in some markets, has accounted for nearly all the increase in recent years. If immigration was quietly supporting renter demand in many markets, then a meaningful slowdown in that flow could be a signal of significant change on the horizon.

The same immigration slowdown that weakens demand assumptions can also constrain housing supply by affecting the labor pool needed to build. A recent Congressional Research Service report noted that foreign-born workers were more likely than native-born workers to be employed in construction occupations in 2024, and that declining net international immigration in 2025 and 2026 could contribute to labor shortages in residential construction. 

A substantial portion of our portfolio is in Houston and Atlanta, and part of why the Sunbelt story carries particular weight. These markets are dealing with some of the labor and employment friction tied to immigration policy, but they are also benefiting from substantial domestic migration. Census data shows Houston added 126,720 residents from July 2024 to July 2025, the largest numeric gain among U.S. metros, while Atlanta added 61,953, ranking third. Further, the Census Bureau noted that counties in the New York metro area are often international migration hubs, and that with fewer gains from international migration, their population growth slowed or even turned to losses.

That’s a silver lining for owners in the Houston and Atlanta markets. Americans are moving into those metros in large numbers, and many are moving for reasons that line up directly with workforce housing demand: housing cost, employment, and relative cost of living affordability. So, while these markets are not immune to policy-related labor challenges or capital market volatility, they are still capturing household growth. The supply pipeline in these high-growth metros is heavily weighted toward Class A and lifestyle product. Multi-Housing News reported that in Atlanta, 27,456 units were under construction at the beginning of the year, but only 4,464 were renter-by-necessity, and affordable units accounted for just 12% of that pipeline. In Dallas, 41,443 of the 48,859 units underway were lifestyle. Workforce renters are generally not cross-shopping newly delivered luxury lease-ups, and those lease-ups are not underwriting their deals around the tenants that typically occupy multifamily developments.

The national performance data reflects that divide as well. Yardi reported that renter-by-necessity assets posted 0.7% year-over-year rent growth in March, while lifestyle assets were down 0.4%. Even in a soft quarter, workforce housing held up better. For firms like ours, focused on affordable and workforce multifamily, that’s a significant distinction. It affects how we think about downside protection, where we believe demand is more durable, and how we position assets to remain competitive without chasing a tenant base we don’t typically serve.

That is why the industry’s response must be centered on operational moves, not theoretical ones. When considering how to optimize workforce multifamily assets, there’s tangible value in focusing on factors that don’t typically show up in pro formas, like tenant retention, resident services, and property resilience.  Retention and services matter more when new demand is less predictable, and labor and materials are more expensive, since stable occupancy is a tangible advantage in a frisky market. Resilience and sustainability matter because operating efficiency is inseparable from long-term value-creation. If population growth is indeed becoming a variable, then discipline at the property level becomes one of our most important assets.

The real message is embedded in the first quarter data. Multifamily isn’t just working through an excess supply cycle. For workforce housing, demand is tied to necessity, affordability, and domestic migration. For Class A housing, it is tied to more volatile factors, including supply cycles and global mobility trends. Understanding this distinction is essential to interpreting current market conditions and positioning portfolios to perform effectively in this environment the industry is facing.

Victoria Gousse is the Principal and Chief Investment Officer at A. Walker & Co.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: zeb@hwmedia.com.