WASHINGTON, DC - Apartment industry market conditions are little changed from three months ago, according to the National Multi Housing Council's latest Quarterly Survey of Apartment Market Conditions. For the first time in the survey's history, at least sixty percent of responses to each question indicated conditions were unchanged from the previous quarter.
"This quarter saw a continued uptick in sales volume and equity financing, which represent another step, albeit a small one, toward a more normal transactions market, after 2009 recorded the lowest number of transactions of the decade," said NMHC Chief Economist Mark Obrinsky.
"The weakest performing index is the Market Tightness Index," said Obrinsky, "underscoring the fact that full recovery of occupancy and rents will require job growth to return to the economy. When that happens, and as a large wave of Echo Boomers begins to enter a supply-constrained market, we should see above average rent growth."
For the second consecutive quarter, the Sales Volume Index reading was above 50. This index was 56 in January, indicating that sales volume around the country is increasing. (For all four indexes, a reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates that market conditions are worsening; and a reading of 50 indicates that market conditions are unchanged.)
The Equity Financing Index of 66 indicates that equity finance conditions continue to improve as well. One-third of respondents said equity financing was more available than three months earlier; this is the highest reading since April 2004.
The Debt Financing Index was 49 for January 2010, indicating that conditions have changed very little from three months ago. While the apartment sector benefits from the mortgage programs of Fannie Mae and Freddie Mac, the CMBS market remains dormant and bank lending activity remains subdued.
The Market Tightness Index's sub-50 reading of 38 indicates that vacancy and/or rent conditions deteriorated over the last quarter. Thirty percent of respondents said markets were looser, meaning higher vacancies and/or lower rents; only seven percent reported that markets were tighter.
Full survey results are posted at www.nmhc.org/goto/QuarterlySurvey.
Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC's members are the principal officers of firms engaged in all aspects of the apartment industry, including owners, developers, managers and financiers. One-third of Americans rent their housing, and over 14 percent live in a rental apartment.
Source: National Multi Housing Council