Developers have their own issues as well even as demand for new product remains unabated. All of the activity is straining labor markets and supply chains, pushing up construction costs, which are further compounded by the price of steel and aluminum tariffs, according to Tara Hovey, president and COO of Optima Inc., a family-owned real estate firm that achieves total quality control by serving as architect, developer, general contractor, and property manager or sales broker for its multifamily rental and for-sale projects in the Chicago area and Arizona.

“The market is facing a capacity issue as there are limits on the availability of some trade labor," Hovey adds, "which without solid teams in place can affect construction schedules." In addition, she notes that scarcity of quality land sites also is impacting development, as developers look to secure property at the right price to make financial sense of a potential transaction.

On the other end of the spectrum, many investors and builders have sought out the luxury segment to deliver their much-needed yields. “Millennials, Gen-Xers and baby boomers are seeking luxury multifamily communities with state-of-the-art amenities that meet—even exceed—their expectations," says Hovey. And with unemployment at historically low levels, economic dynamics bode well for the luxury sector. “The only cautionary note,” she warns, “is whether wage growth and depth of the market can keep pace.”