Still Standing

By Rob Jafek, Principal | Boomerang Capital Partners

Elton John’s chorus to “I’m Still Standing’ characterizes the current market pretty well:

Don't you know that I'm still standin' better than I ever did?

Lookin' like a true survivor, I'm feelin' like a little kid (Ah-ah)

And I'm still standin' after all this time (Ah)

Pickin' up the pieces of my life without you on my mind (Ah-ah)

You’ve heard this song, and I bet you did the ‘ah-ah’ in your head. Great song.

It has been easy to find things to worry about in real estate over the last few years, and the latest numbers on existing sales didn’t help.Mortgage rates remain high, transaction volumes are low, affordability is difficult, and Phoenix has been digesting a tremendous amount of new apartment supply. But there are at least two things going on right now that deserve some attention on the other side of the ledger, and I’d argue they are a big deal, and more importantly - leading indicators.

The first is demand.

As of September 16, the Atlanta Fed’s GDP Now model estimates third-quarter real GDP growth at a 5.1% annual rate. That is a nowcast, not an official GDP number, and it will change as additional data arrive. Still, 5.1% is an unusually strong number this late in the quarter.

For real estate, GDP itself is less important than what sits underneath it. People pay rent and mortgages with income, and income generally starts with a job.

Phoenix continues to add jobs, although at a much more modest pace than during the post-pandemic boom. BLS data show Phoenix metro payroll employment up about 1.2% from a year ago as of July, representing roughly 30,000 additional jobs. Population continues to grow as well. The University of Arizona currently projects Phoenix MSA population growth of about 1.5% in 2026. The latest Census estimates show Maricopa and Pinal counties together added roughly 59,000 people between July 2024 and July 2025.

None of those numbers makes mortgage rates lower or houses more affordable. But they matter. There are plenty of variables affecting housing demand, but employment, income and population are pretty close to the foundation. More people with jobs and income generally means more households needing somewhere to live.

The second positive is supply.

Phoenix we’ve built a lot of apartments. More accurately, developers made decisions several years ago to build a lot of apartments, and many of those units subsequently arrived at roughly the same time. We have spent the last few years working through that supply. And there is increasing evidence that we are getting through the worst of it.

According to Cushman & Wakefield, Phoenix absorbed 12,741 apartment units during the first half of 2026, the strongest first-half absorption the firm has recorded since at least 2000. All 15 Phoenix submarkets recorded positive absorption. Vacancy declined 100 basis points from a year earlier to 11.6%.

Northmarq tells essentially the same story using slightly different measurements. It recorded more than 12,400 units of absorption during the first half of 2026 against fewer than 6,700 units delivered. Meanwhile, the number of apartments under construction has declined in seven of the past eight quarters and is now at its lowest level since early 2021.

That does not mean the apartment problem is over. And apartments matter to SFR because both are housing, and people have options. Vacancy remains high and rents are still under pressure. But the direction has changed. Demand is absorbing units faster than developers are delivering them, while the pipeline behind those deliveries is shrinking.

Those two things fit together. The underlying economy continues to create households capable of consuming housing at the same time that the extraordinary Phoenix apartment construction cycle is winding down.

Real estate still has plenty of headwinds. But demand did not disappear, and the supply wave does not last forever. We’re still standin', possibly better than we ever did. Lookin' like a true survivor, and optimistic for what’s next.