The April jobs report was just released, and on the surface, it looks like good news.
Nonfarm payrolls came in higher than expected, which on the surface makes the job market look strong—especially considering we’re still dealing with inflation and elevated interest rates. It might seem like good news at first glance, but anyone who’s been through a few economic cycles knows better than to celebrate too early.
The reality is, you have to dig deeper than the headlines. One strong jobs report doesn’t mean we’re in the clear. Context matters—and so does the rest of the data.
Yes, the report was better than expected. But better-than-expected doesn’t mean good. And it certainly doesn’t mean sustainable.
When paired with plummeting consumer sentiment, rising credit stress, and a market still trembling from rate pressure, this data should be viewed with measured caution, not blind confidence.
Don’t be fooled by headline numbers.
The media is already in spin mode around April’s jobs report. It’s primarily focused on the 275,000 new jobs added, about 75,000 above expectations. But when you pull back the curtain, you can see a very different and more nuanced story.
We’re also starting to see early signs of a cooling job market. The unemployment rate ticked up to 3.9%, and while that’s still historically low, it could be the beginning of a broader slowdown. Wages, meanwhile, have flatlined. That might help ease inflation from a policy standpoint, but for everyday Americans, it means their dollars aren’t going as far.
Labor force participation hasn’t moved much either, and it’s still well below where it was before the pandemic. In other words, fewer people are working or even looking for work than we saw just a few years ago.
And here’s the kicker: much of the job growth is concentrated in lower-paying fields like hospitality and healthcare support, not high-income, white-collar roles that typically fuel homeownership and investment activity. That matters. If people don’t see their income continually grow or feel good about where things are headed financially, most will think twice before making major commitments, like buying a house.
Real estate reacts to confidence, not just economics
I’ve written extensively here in my column that it’s sentiment, not fundamentals, that moves markets. Unfortunately, this is also true for real estate.
When consumer sentiment drops, as it did this month, people become more cautious. And that caution affects everything from home buying and renting to business expansion and property development.
Buyers hesitate. Renters delay moves. Developers pause projects. Investors hold onto capital rather than deploy it to riskier deals. Even if the employment data appears stable, fear and uncertainty can grind transaction volumes to a halt. Confidence is the fuel of the real estate engine—and right now, the tank is running low.
Real estate is a slow-moving asset class, but it’s not immune to shifts in consumer psychology. In fact, its relative illiquidity makes it more vulnerable during periods of declining confidence. Properties don’t sell overnight, loans take time to process, and tenants don’t always pay on time. If you wait to react until after sentiment crashes, it’s already too late.
The illusion of stability in a fractured market
One of the most dangerous assumptions investors can make is that real estate is somehow disconnected from broader economic risks.
While I remain a committed advocate for alternative investments—and real estate is a cornerstone of that strategy—I am not blind to macroeconomic interconnectivity. Every asset class is part of the same financial ecosystem. When liquidity dries up or credit tightens, real estate is affected just like everything else.
Take current financial conditions as an example. The 10-Year Treasury yield today is 4.6%, putting pressure on mortgage rates and dampening affordability, while credit card delinquencies have hit 3.1%—the highest rate in more than a decade. To put things in perspective, household debt has now surpassed $17.5 trillion, according to the New York Fed.
These aren’t just numbers—they reflect a stressed consumer base. A stressed consumer base doesn’t support rising rents, higher home prices, or speculative development. It threatens all three.
Even if your portfolio is cash-flowing and well-positioned today, the macro backdrop could erode that performance over time. Vacancy risk increases, rent growth slows, and cap rates expand. The illusion of stability can vanish quickly in a market driven by credit, confidence, and capital flow.
For real estate investors, now is the time to de-risk
So what should real estate investors be doing right now?
This is not a moment to chase returns or get aggressive. It’s a time for discipline—to play defense without retreating entirely from the field.
Focus on cash flow and downside protection.
Cash flow should be your top priority. Avoid speculative plays that rely on appreciation or future refinancing. Instead, pursue assets that produce durable, recurring income even in a downturn. These kinds of investments survive turbulence and come out stronger on the other side.
Evaluate tenant quality and asset location.
Not all real estate is created equal. Workforce housing and essential retail hold up well when times get tough. On the other hand, high-end luxury units or assets in oversaturated markets can become significant liabilities. Dig deep into tenant quality, lease terms, and location dynamics. Look for investments where the fundamentals still make sense even under stress tests.
Be conservative with leverage.
With interest rates still high and refinancing uncertain, now is not the time to be overleveraged. Fixed-rate debt is preferable wherever possible, and variable-rate exposure should be closely monitored or reduced. Avoid putting yourself in a position where rising costs can eat up your cash flow or force asset sales.
Keep capital in motion, but with caution.
Opportunities will present themselves, especially as weaker investors are forced to exit positions. But being opportunistic doesn’t mean being reckless. Set clear acquisition criteria, build in conservative assumptions, and only act when the numbers justify the risk. Liquidity is a competitive advantage in environments like this.
Rely on experienced operators.
If you’re a passive investor, ensure you work with seasoned sponsors who have weathered previous downturns. Their underwriting discipline, operational experience, and capital management skills can make or break your investment performance.
A job report can’t fix fear.
Let’s remember the bigger picture: a positive jobs report may boost headlines, but it can’t paper over a deeper erosion of economic confidence.
Yes, more jobs are always better than fewer. But when those jobs are low-paying, inflation remains sticky, and people are maxing out their credit cards just to cover essentials, we are not in recovery. We’re in limbo, and sentiment is trending in the wrong direction.
In real estate, as in life, timing and judgment are everything.
This is not the time to assume the worst is behind us. It’s time to position yourself so that you’ll still be standing if the worst isn’t over. You don’t need to be bearish. But you do need to be smart.
I’m not pulling back from real estate, far from it. But I’m only moving forward with investments that make sense in this market, grounded in cash flow, buffered by liquidity, and backed by experience.
Because preservation isn’t a weakness in today’s environment. It’s wisdom.