WASHINGTON, DC - Apartment markets improved across all areas for the seventh quarter in a row, but the pace of improvement moderated according to the National Multi Housing Council's (NMHC) Quarterly Survey of Apartment Market Conditions. The survey's indexes measuring Market Tightness (56), Sales Volume (51), Equity Financing (56) and Debt Financing (65) all measured at 50 or higher, indicating growth from the previous quarter.
"Even after nearly three years of recovery, apartment markets around the country remain strong as more report tightening conditions than not," said NMHC Chief Economist Mark Obrinsky. "The dynamic that began in 2010 remains in place: the increase in prospective apartment residents continues to outpace the pickup in new apartments completed. While development activity has picked up considerably since the trough, finance for both acquisition and construction remains constrained, flowing mainly to the best properties in the top markets."
Key findings include:
Financing still available only for top markets. Only one in five (21 percent) reported acquisition capital being similarly available for all geographic markets and properties. Construction financing was even more restricted. Just 8 percent of respondents indicated construction financing for new apartments was available in all markets for all property types. The vast majority reported construction financing as only available for either the top properties in the top markets (37 percent) or for all property types in the top markets (36 percent).
Market Tightness Index declined to 56 from 76. Marking the 11th straight quarter of the index topping 50, the majority (62 percent) reported stable market conditions. One quarter reported tighter markets and 14 percent indicated markets as looser.
The Sales Volume Index dipped three points to 51. For the eighth consecutive quarter, "unchanged" was the most common response (49 percent), compared to 24 percent who indicated tightening conditions and 21 percent who said sales volume was lower.
Equity financing conditions still improving. Dipping two points to 56, the Equity Financing Index remained above 50 for the 13th quarter in a row. However, 14 percent reported that equity financing was less available, up from 9 percent last quarter. This compares to 26 percent who reported equity as more available and 56 percent reporting no change this quarter.
Debt Financing Index remains high. The Debt Financing Index declined from 77 to 65, but only 9 percent believed that borrowing conditions for debt financing had worsened--the seventh consecutive quarter in the single digits.
Full survey data are available at the NMHC Website.
About the survey: The October 2012 Quarterly Survey of Apartment Market Conditions was conducted October 15-22, with 89 CEOs and other senior executives of apartment-related firms nationwide responding.
Based in Washington, D.C., 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.