The apartment industry has enjoyed its fifth consecutive quarter of uninterrupted growth, according to the latest results of the National Multi Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions.
The report proves that optimism continues for the multifamily industry. The findings reflect a gradual recovery for the multifamily sector that faced a 50-year low in apartment starts in 2009.
“Market conditions improved across the board, even from the rather strong level of three months ago, said NMHC Chief Economist Mark Obrinsky. Demand for apartment residences ” and apartment properties ” continues to grow. We anticipate this increasing further in the coming years due in part to the large number of younger households moving into the housing market and a greater preference shown for renting.
The apartment market still lacks widespread capital, however. The strength of the sectors recovery has attracted capital to the industry, said Obrinsky. But our latest survey finds that capital is largely targeted at top-tier properties in core markets and not widely available throughout the U.S. Fully 79 percent of respondents said capital was constrained either by property type, by market or both.
Key findings include:
Capital availability lacks uniformity. Only 17 percent of multifamily firms reported that capital is available for all property types in all markets. By contrast, 36 percent said it is constrained in secondary and tertiary markets and 34 percent said it is constrained for all properties other than top-tier ones ” even in primary markets.
The Market Tightness Index increased to 74 from 60. Nearly half (49 percent) reported tighter markets ” reflecting lower vacancy rates and/or higher rents ” compared to only one percent reporting looser markets.The Debt Financing Index declined to 65 from 74. As the only index that dropped below 50 in the past nine quarters (48 in Q4 2010), borrowing conditions continued to improve for the industry. Just four percent believed conditions worsened from last quarter, compared to 34 percent who reported improving conditions.
The Sales Volume Index rose to 57 from 50. This continues an 11-quarter run above 50, and some reports from the field suggest that volume could be even higher if more product was available.
The Equity Financing Index grew slightly to 62 from 60. One third of respondents reported quarter-to-quarter equity financing as more available, compared to nine percent reporting less availability.
Full survey data are available at: http://www.nmhc.org/default.aspx
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