December 2, 2009
Apartment Market Conditions Improving, Bid-Ask Spread Narrowing

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

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, or visit NMHC’s web site at

Source: NMHC, October 29, 2009

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Brought to you by the Steel Framing Alliance (SFA) on the first Wednesday of each month except January, Framework Online arms you with the latest news and commentary on the steel framing and construction industries. In addition to industry headlines, trends and project profiles, Framework Online provides information and ideas that will better enable members to increase their participation in the residential and commercial construction markets.