Uneven Rent Growth Favors Workforce Housing
Uneven Rent Growth Favors Workforce Housing
On the whole, apartment rent growth in 2025 has been modest. According to the latest report by Yardi Matrix, rents have “been range bound between 0.5% and 1.1% for the past 20 months.” Specifically, between July 2024 and July 2025, multifamily rents rose by 0.7%.
But this is just the “headline” figure; a careful look at the numbers reveals a sharp divergence in multifamily rent growth that’s largely influenced by who’s renting. Here’s what that means.
“Renters by Choice” and “Renters by Necessity”
Broadly speaking, a multifamily community can cater to one of two groups:
Renters-by-Choice: Also known as “lifestyle renters,” these are high-income tenants who have the wealth to own a home but voluntarily choose to rent for the premium amenities and flexibility. Accommodations catering to this demographic include products like luxury downtown high-rises and uptown lofts.
Renters-by-Necessity (RBN): This demographic, which forms the backbone of the rental market, includes moderate-income workers like police officers, teachers, health aides, and factory workers. While these tenants can afford rent without assistance, they may lack the funds for a down payment. They rent because they have to, not simply because they want to. Apartments catering to renters-by-necessity are frequently termed workforce housing communities.
So, how did these two segments perform?
While the “renters-by-choice” segment saw rents grow by a muted 0.1% year-over-year, the “renters-by-necessity” segment experienced rent growth of 2.1% over the same period.
As Yardi Matrix puts it bluntly, “[rent] increases are concentrated in the RBN segment.”
Why this matters for investors: This divergence in rent growth suggests that attainable workforce housing communities that cater to renters-by-necessity could potentially experience more constant tenant demand than luxury rentals, no matter the economic climate. While renters-by-necessity will always need attainable, high-quality, and well-located housing, the demand for “nice-to-have” apartments may fluctuate more, since renters-by-choice can opt out at any time.
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