WASHINGTON,
DC – The apartment market is showing signs of
improvement, according to the National Multi Housing
Council’s latest Quarterly Survey of Apartment
Market Conditions.
The survey showed increased sales activity and improvements
in the availability of debt and equity capital compared
with three months ago. The Sales Volume Index hit its
highest level in four years, while the Equity and Debt
Financing Indexes were the highest in three years.
Only one index—the one measuring market tightness
(vacancies and rent levels)—remained below 50
(index numbers below 50 indicate worsening conditions),
but it also showed improvement over the prior quarter,
rising from 20 to 31.
“The broad improvements in sales volume and debt
and equity financing suggest the transactions market
may finally be thawing,” noted NMHC Chief Economist
Mark Obrinsky. “Nearly half (45 percent) of respondents
indicated that the gap between what sellers are asking
for and what buyers are offering—the bid-ask spread—has
narrowed.”
“But the economic headwinds remain strong,”
Obrinsky added, “as the employment market continues
to sag, demand for apartment residences continues to
slip. Though this quarter’s Market Tightness Index
is improved compared to last quarter, it still indicates
higher vacancies and lower rents.”
Highlights of the Survey Results
- The Market Tightness Index
rose from 20 to 31. Nearly half (49 percent)
said markets were looser (with higher vacancies and
lower rents), while 11 percent said markets were tighter.
This was the ninth straight quarter in which the index
remained below 50, but the fourth consecutive quarter
in which the index measure has risen. For the year,
the Market Tightness Index averaged 20, the lowest
on record (since 1999).
- The Sales Volume Index rose
from 44 to 59, the highest level in four years.
While most respondents (62 percent) reported no change
in sales volume, 28 percent said sales volume was
higher—the highest share reporting that in four
years. This was the first quarter in four years in
which this index read above 50. For the year, the
Sales Volume Index measured 36, a substantial gain
from the 2008 annual figure of 13.
- The Equity Financing Index
increased from 39 to 58, the highest in three years
as 25 percent of respondents said equity financing
was more available. This was the first quarter since
April 2007 in which this index read over 50. For the
year, the Equity Financing Index measured 35, also
a substantial gain from last year’s figure of
13.
- The Debt Financing Index increased
again from 39 to 59, also the highest in three years
with 28 percent indicating that this is a better time
to borrow than three months earlier. This was also
the first time in the last 11 quarters that this index
read over 50. For the year the debt financing index
measured 41, up significantly from 2008’s 21.
Full survey results are posted at www.nmhc.org/goto/QuarterlySurvey09.
Note: The October 2009 Quarterly Survey of Apartment
Market Conditions was conducted October 19-26, 2009;
53 CEOs and other senior executives of apartment-related
firms nationwide who serve on NMHC’s Board of
Directors or Advisory Committee responded. The July
2009 Quarterly Survey was conducted July 20-29, 2009;
75 responded. The October 2008 Quarterly Survey was
conducted October 14-23, 2008; 70 responded.
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. For more information, contact NMHC at 202/974-2300,
e-mail the Council at info@nmhc.org, or visit NMHC’s
web site at www.nmhc.org.
Source: NMHC, October 29, 2009
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