01/03/2024
Rising Consumer Confidence Boosts Apartment Demand
When consumers feel good about the economy, apartment demand makes notable strides.
When consumers feel good about the economy, apartment demand makes notable strides.
The University of Michigan’s Consumer Sentiment Index is a monthly survey that measures how Americans feel about spending money and the confidence they have in the future of the economy.
In 2022, consumer sentiment hit near 30-year lows as inflation climbed to a 40-year high and the Federal Reserve started hiking interest rates to combat that increase.
“While the economy was actually in good standing, it didn’t feel that way to consumers, who were paying more and more in interest rates throughout the year,” according to the report.
Things have been much better in 2023 with consumer confidence rising, inflation easing and the future looking more stable.
“While consumer sentiment is not as high as it was before the pandemic, it’s at least on its way up once again,” RealPage said. “As a result, household formation has improved, bolstering apartment demand.
Individuals’ confidence in their personal financial situation is making a difference, according to Brad Case, Chief Economist, Middleburg Communities.
He tells GlobeSt.com that empirical research has shown that one of the most important factors in encouraging people to form new households.
“The local unemployment rate is also a useful measure, but consumer confidence is what it’s all about,” Case said. “When confidence improves, people are willing to sign leases. It’s as simple as that.”
Anthony Tiritilli, president of development for residential real estate company Lynd, tells GlobeSt.com that there is no question that consumer confidence is closely correlated to apartment demand but perhaps not as directly as it is to retail sales.
“The difference being that, for the most part, apartments are filling a consumer need whereas most nonessential retail is filling a want,” Tiritilli said.
https://www.globest.com/2023/12/21/rising-consumer-confidence-boosts-apartment-demand/