NMHC Survey Shows Two Continuous Years of Growth for Multifamily

The latest Quarterly Survey of Apartment Market Conditions from the Washington, D.C.-based National Multi Housing Council indicates that improving market conditions continue to be an advantage for the multifamily industry.

Washington, D.C.—The latest Quarterly Survey of Apartment Market Conditions from the Washington, D.C.-based National Multi Housing Council (NMHC) indicates that improving market conditions continue to be an advantage for the multifamily industry.

Showing growth vis-à-vis the previous quarter was each of the survey’s four indexes, reflecting Market Tightness, Sales Volume, Equity Financing and Debt Financing. It was the seventh time in the last eight quarters all indexes had stood about 50, denoting growth over the previous quarter. The January 2012 Quarterly Survey of Apartment Market Conditions was conducted January 23 through 30, 2012, and garnered responses from 105 chief executive officers and other senior executives of apartment-related companies across the country.

The survey’s key findings included the following:

The Debt Financing Index edged up from 70 to 74, with one of every two respondents reporting that now was a better time to borrow. One year before, that ratio had stood just above one in five.

The Market Tightness Index grew to 60 from 52, in what was the eighth consecutive quarter with the index standing above 50. Compared with a 46 percent average over the dozen-year history of the survey, 51 percent of respondents reported the markets as unchanged from the previous quarter.

The Sales Volume Index continued an unbroken 10-quarter-long streak at or above 50. However, the index fell from 54 to 50, its lowest showing since July 2009.

The Equity Financing Index climbed to 60 from 54, also establishing a 10-quarter run of 50-or-higher results. More than half of all respondents reported conditions unchanged from the earlier three-month period in the Market Tightness, Sales Volume and Equity Financing Indexes.

In addition, most markets displayed an uptick in development activity, with 53 percent of respondents reporting increases in land acquisition, lining up financing and obtaining building permits. An additional 20 percent reported that a rapid pace had been established for new project groundbreakings.

Reflecting on the past two years’ nearly continuous recovery, NMHC chief economist Mark Obrinsky was upbeat. “In the face of an unprecedented virtual shutdown of development, the apartment market continues its strong recovery as developers play catch up to the growing demand for rental housing,” he said.

“Investors continue to view apartments as a preferred asset class in today’s environment, and long-term demographic changes favor rental housing. However, we expect the pace of improvement in transaction activity to ease somewhat moving forward.”

To view the full survey data, visit http://www.nmhc.org/goto/6500.