Immigration has bolstered apartment demand. What an expected slowdown means in four gateway markets.

Rentals in South Florida, Dallas-Fort Worth, LA and Orange County face unique challenges

By Juan Arias, Jesse Gundersheim, Bill Kitchens

CoStar Analytics

June 12, 2025 | 1:36 P.M.

Since 2020, more than 80% of the population growth across several major U.S. cities has come from international immigration, which has substantially benefited apartment demand in such markets as South Florida, Dallas-Fort Worth, Los Angeles, and in Orange County, California.

Apartment demand in both South Florida and Dallas-Fort Worth experienced an above-average effect from increased international migration, with international migrants accounting for over 90% of positive population gains in these metropolitan areas since 2020.

While Los Angeles and Orange County saw a lower contribution to apartment demand from international migrants, at just over 70%, these new residents still helped generate exceptional levels of apartment demand in these two markets.

Across these four metropolitan areas, foreign-born households that arrived in the U.S. since 2010 tend to rent at elevated rates. Over 60% of these households are renters, as shown by the blue bars in the above chart.

This renter rate in these areas stands well above that of the native-born population in these areas, which averages around 33% of renter households. This indicates that growth in the foreign-born population has an outsize effect on renter demand relative to the native population growth.

Oxford Economics has forecast a moderation in immigration, which could affect apartment performance in the aforementioned markets, albeit in different ways.

South Florida: A shifting tide in rental dynamics

In South Florida, annual renter demand growth is expected to slow after immigration-driven demand for apartments subsides after 2025, slowing by a projected 30% annually in 2026, a further 7% in 2027 and another 30% in 2028.

Recent workforce data in South Florida already indicate sluggish labor force growth, suggesting a slowdown in working-age immigration, which is already occurring and is affecting apartment demand.

Additionally, local market participants have highlighted an increase in apartment vacancy in certain areas, driven by foreign-born residents departing the region.

This increase in vacancy comes at a time when apartment construction in South Florida remains elevated, with the new supply of luxury units accounting for 17% of the market's existing four- and five-star-rated units, well above the U.S. average of 6%, as indicated in the chart above.

While existing apartments have performed relatively well in South Florida, with the current vacancy for luxury units remaining below pre-pandemic levels, lease-ups for new units have taken longer, and concessions remain elevated.

As the region continues to grapple with the apartment supply wave, specifically in the downtowns of Miami and Fort Lauderdale, a moderation in renter demand could further extend the lease-up process for new apartments. Additionally, a recovery in effective rents in these areas could also take longer as concessions remain in place.

Dallas-Fort Worth: Suburban expansion bumps up against demographic shifts

A surge in international migration since 2020 has buoyed multifamily demand in Dallas-Fort Worth. However, the expected pullback in international movers comes just as the supply-demand imbalance is stabilizing, with most of the current supply-side pressure occurring in suburban submarkets. Most of the new apartment construction is concentrated in the four- and five-star-rated segments, which account for 3.7% of existing inventory, down from a peak of 12.4% reported in mid-2023.

Within Dallas-Fort Worth, Dallas County has received the largest share of foreign-born residents, accounting for roughly 46% of all international migration since 2020. Even so, foreign-born population growth within Dallas County has mostly stagnated, increasing just 1.7% since 2020, as the region expanded its resident base by 9.2%.

Dallas County continues to see population outflows to neighboring Collin and Denton counties. Local contacts say these suburban counties offer residents relative affordability, well-regarded school districts and proximity to major employment centers such as Plano and Frisco.

Meanwhile, Tarrant, Collin and Denton counties account for another 51% of the region's international migration, with outlying rural counties making up the balance. Any slowdown in the number of foreign-born residents relocating to North Texas would likely be felt in these suburban submarkets as builders have saturated submarkets such as Frisco/Prosper, Denton and Allen/McKinney with new units. Stabilized vacancy rates have remained relatively firm in these submarkets, a testament to their steadfast demand drivers.

Orange County: Navigating demographic headwinds in a coveted apartment market

Foreign immigration into Orange County has historically boosted demand for housing and partially offset domestic migration outflows to states offering a less expensive cost of living, a shift that surged post-COVID. Total population growth finally turned positive again in Orange County last year after a string of annual losses, but a slowdown in immigration may threaten a market where rent growth has remained elusive.

Multifamily vacancy in Orange County remains fairly compressed, and overdevelopment risk is negligible. When completed, the high-quality apartment projects currently under construction will only increase the existing four- and five-star-rated supply by a moderate 8%, and the stabilized vacancy among those properties has compressed over the trailing year, to 4%.

However, lower-priced apartments in the county have already lost occupancy, and overall demand has not been strong enough to entice rent growth on par with historical averages.

Furthermore, vacancy has drifted higher among mid- and low-quality multifamily properties, which comprise over 70% of the market's total supply. Pockets of Orange County that are seeing higher vacancy in mid- and low-quality apartments include some of the more affordable areas, including Santa Ana, Garden Grove and Westminster. These cities have a higher level of foreign-born residents.

Los Angeles: The interplay of immigration and urban recovery

Compared to Orange County, stabilized high-quality multifamily buildings in Los Angeles have a slightly higher vacancy rate of 6.5%.

Also, under-construction four- and five-star-rated units account for a higher percentage of the existing inventory at approximately 10%. The LA fires displaced thousands of residents and drove multifamily vacancy rates lower across all apartment segments. Despite the increased demand for rental units, trailing-year rent growth in LA remains subdued at less than 1% and has lagged inflation for several years.

Boosted by foreign immigration, population flows in LA finally turned positive in 2024, but the metropolitan area's total population remains 2.4% below its 2020 level due to heavy outmigration from 2020 to 2022. A slower pace of foreign immigration would likely threaten the region's recent population recovery and reduce the stronger multifamily demand that has recently emerged in LA.