Suburban Markets Shine Amid Pandemic

NMHC's Quarterly Survey of Apartment Market Conditions showed a modest rebound from impacts of COVID-19, though its Index of Market Tightness displayed weakness.
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COVID-19 continues to limit economic activity, yielding higher apartment vacancies and lower overall rent growth. But hopeful signs are on the horizon. Industry experts are seeing more positive conditions in many suburban markets. Buyers of apartment properties are returning to the market, spurred by historically low interest rates and increased equity financing availability. These are among key findings of the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for October 2020.

Survey results found sales volume, equity financing and debt financing indexes above the breakeven level of 50. But the index for Market Tightness registered a 35, indicating ongoing weakness. The Sales Volume Index increased from 18 to 72, based on 60 percent of respondents indicating higher sales volume than three months earlier. It marked the first time in more than two years respondents reported increasing sales volume.


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The Equity Financing Index climbed from 34 to 62, with 35 percent of respondents reporting equity financing more available than in the three months prior. A scant 12 percent felt equity financing was less available, while 42 percent said it was unchanged.

The Debt Financing Index inched p from 60 to 73, due to 51 percent of respondents reporting improved conditions for debt financing vis-a-vis three months prior. Just six percent felt conditions were worse and 35 percent reported conditions unchanged.

In an effort to learn how renter preferences are impacted by the continuing pandemic, the survey had respondents rank various apartment product types, including high-rise, mid-rise and garden-style, based on where they perceived the highest levels of demand.

First place was captured by garden-style two-plus bedroom units, second place by garden-style studios and one-bedroom units. Third place went to mid-rise two-plus bedroom units, fourth to mid-rise studios and one-bedrooms, fifth to high-rise studios and one-bedrooms, and sixth to high-rise, two-plus bedroom units.  Asked how long they anticipated the trends to last, almost half of respondents answered six to 12 months beyond the pandemic, while 31 percent envisioned them being sustained only as long as the pandemic lasted.