While COVID-19 and the weak economy are the principal drivers of multifamily demand at the moment, longer-term trends such as population growth and migration still play a role.
Net international migration in the U.S. (total of new residents from other countries less former immigrants who leave the U.S.) has been declining in recent years and is poised to fall further over the near term.
More recently arrived immigrants largely rent, so declining immigration is a small drag on rental housing demand.
In 2019, net international migration totaled 595,000 people, a 15.2% decline from the previous year. The 2018 decrease was more substantial at 24.6%.
Last year's 595,000 total was the lowest level in at least 30 years and was 33.5% under the 19-year average of 895,000 shown on Figure 1.
Immigration into the U.S. is positioned to fall further in the short term due to the weak economy, COVID-19 and federal immigration policies.
New Immigrants Are Renters
All population growth is a source of demand for rental housing (single-family and multifamily), including new residents from other countries.
Census data reveals that the country's foreign-born residents have comparable homeownership levels to the general U.S. population once they have lived in the U.S. for a period of time. The homeownership rate for immigrants who moved to the U.S. prior to 2000 was 64.2% in 2018, essentially the same as for all U.S. households.
The most-recently arrived immigrant cohort—entering the U.S. from 2010 to 2018—had a very low average homeownership rate of only 22.2% in 2018. These newer immigrants represent a relatively small, but still important source of rental housing demand.
The 2010-2018 immigrant cohort occupied 2.2 million rental housing units out of the total 43.8 million multifamily and single-family occupied rental units in the U.S. (The data cannot be separated between single-family and multifamily renters.)
As immigration continues to fall, new rental demand from new immigrants will also continue to subside.
New York, Los Angeles & Miami Lead Metros
Immigration is just one source of multifamily demand, but multifamily markets with larger immigrant populations are likely to feel the impact of slowing immigration more than other markets. This is especially true if these metros are largely dependent on international migration for population growth and household formation (such as New York, Los Angeles, Chicago and Miami).
As shown on Figure 3 below, in 2018 the largest number of recent immigrants lived in New York followed by Los Angeles and Miami/South Florida. Combined, these three metros had 25% of all foreign-born residents who entered the U.S. from 2010 to 2018 and 25% of all rental units occupied by the newer immigrants. The newer immigrants in these metros occupied more than 550,000 rental units in 2018.
Other metros with high totals of newer immigrants and immigrants in rental units were Houston, Dallas/Ft. Worth, Chicago, San Francisco, Boston, Washington, D.C., Seattle, San Jose and Atlanta.