Apartment Industry Has Solid First Quarter

By Dees Stribling, Contributing Editor

Washington, D.C.—The National Multi Housing Council, in its latest Quarterly Survey of Apartment Market Conditions, reports that the U.S. apartment industry is still chugging along at a robust pace. The survey is based on the responses of 91 CEOs and other senior executives of apartment-related firms nationwide and, on the whole, they had positive things to say about their markets, financing and sales.

The first quarter 2012 survey’s four indexes are all still over 50, which indicates quarter-to-quarter growth for each. In some cases, the indexes are still well over 50. Market Tightness, for instance, came in at 74, while Debt Financing was 65 and Equity Financing 62. Sales Volume was the only index below 60, and even it came in at a relatively strong 57.

Market conditions have improved across the board, even from the rather strong level of three months ago, explains NMHC chief economist Mark Obrinsky. Demand for apartment as residences and apartments investment properties continues to grow, and the NMHC anticipates more growth in the coming years due in part to the large number of household formations involving younger householders, who aren’t quite as eager to buy dwelling space as their elders were at the same point in their lives.

Among other things, the survey found that 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 that it’s constrained in secondary and tertiary markets, while 34 percent thought that it’s constrained for all properties other than top-tier ones, even in primary markets. Bankers are still a little skittish, it seems, even for multifamily.

Nearly half of the respondents (49 percent) reported tighter markets, which generally reflects lower vacancy rates, higher rents, or both. Only 1 percent reported looser markets. Also, the Sales Volume Index rose from 50 to 57 quarter-over-quarter, and some respondents suggested that volume could be even higher if more product was available.

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