WASHINGTON, DC - Apartment market conditions continue to worsen, though the pace is decelerating, according to the National Multi Housing Council's (NMHC) latest Quarterly Survey of Apartment Market Conditions.
While all four market indexes remained below 50 (index numbers below 50 indicate conditions are worsening; numbers above 50 indicate conditions are improving), they all rose from three months ago. In particular, about half of respondents thought conditions were unchanged in the sales volume, equity finance, and debt finance markets.
"This global downturn has led to the most challenging economic conditions in at least five decades, and the apartment industry is suffering like other industries," noted Mark Obrinsky, NMHC's Chief Economist. "Capital remains difficult to obtain, and the sharp and continuing drop in employment, in particular, is sapping demand for apartments in markets throughout the country."
"Interestingly," he continued, "despite considerable media focus on the "shadow rental" market, only a slim majority of respondents noted greater competition from condos and single-family rentals than in previous years."
• The Market Tightness Index, which measures changes in occupancy rates and/or rents, rose to 16 from 11 last quarter.
• The Sales Volume Index rose from 12 to 30, the highest level in seven quarters.
• The Equity Financing Index increased from 12 to 29. Forty-seven percent of respondents thought equity financing conditions were unchanged, the highest such response in seven quarters.
• The Debt Financing Index rose from 26 to 41, with 14 percent of respondents reporting that now is a better time to borrow than three months earlier.
In a special fifth question to NMHC's Quarterly Survey, one-third (33 percent) said such competition was unchanged. Another four percent thought there was less competition, and 11 percent don't consider condos and single-family rentals to be significant competition for apartments in their markets. A slightly majority, 52 percent, did report more competition from condos and single-family rentals than in previous years.
Full survey results are posted at www.nmhc.org/goto/QuarterlySurvey09.
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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. Nearly 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.
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