Dennis Norman
The apartment market continues to rebound from the “Great Recession” according to the April 2010 Quarterly Survey of Apartment Market Conditions conducted by the National Multi-Housing Council (NMHC).
According to respondents to the survey, sales volume is up, debt and equity are more available and the rental markets are getting better. The survey has four market indexes; all of which recorded better market conditions this quarter than the prior quarter, a feat which has not happened since October 2005.
“There is clear improvement in apartment market conditions on all fronts,” said NMHC Chief Economist Mark Obrinsky. “We saw a sharp increase in the Market Tightness Index, which fits with the surprisingly strong (for a seasonally weak period) effective rent growth. And the all-time highs recorded by the sales volume and equity financing indexes offer even more reason for optimism.”
“Even so, a sustained recovery in the apartment market needs a firm economic and demographic foundation. While the long-term prospects for the industry are bright, in the near-term the industry’s prospects still depend upon a stronger rebound in both the job market and household formation.”
Survey Highlights:
- The Market Tightness Index, which measures changes in occupancy rates and/or rents, rose sharply from 38 to 81. This was the highest figure in nearly four years. Fully 64 percent of respondents said markets were tighter (meaning lower vacancies and/or higher rents). Only two percent reported looser markets. This is the sixth straight increase for this measure.
- The Sales Volume Index increased to a record-setting 72 from 56. Forty-eight percent of respondents indicated sales volume was higher. This is the highest ever reported and represents a nearly complete reversal from a year ago, when 43 percent said it was lower.
- The Equity Financing Index increased further from 66 to a record 71, indicating that equity financing is more available. Nearly half indicated that equity financing was more available; another record. Only three percent thought equity financing was less available. This is the sixth consecutive quarter this index has improved.
- The Debt Financing Index also increased, from 49 to 58, meaning borrowing conditions have improved. Eighteen percent said conditions for multifamily borrowing were better this quarter; nearly 80 percent indicated that borrowing conditions were unchanged. Only two percent said conditions were worse.
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