August 8, 2019
Anyone who believes that the apartment sector is in decline should take a look at the National Multifamily Housing Council’s (NMHC) most recent quarterly survey. In its “Quarterly Survey of Apartment Market Conditions for July 2019,” the NMHC indicated a continued strong showing for apartment demand. Specifically, the index metrics were as follows, with the break-even level at 50:
- Market Tightness: 60. This indicates that apartment markets are becoming tighter, with more supply constraints.
- Equity Financing: 56. This indicates that, more equity financing is available.
- Debt Financing: 80. This indicates that borrowing conditions are improving.
“These latest figures illustrate that, in spite of construction levels hovering near recent highs, there remains significant pent-up demand for apartments,” said NMHC Chief Economist Mark Obrinsky. “Nearly a third (32%) of respondents reported stronger rents and occupancy levels, while just 11% indicated looser market conditions.”
There were, however, some issues with which the industry was concerned.
The Sales Volume Index, at 48, “indicated a continued softness in property sales, albeit with considerable disagreement among respondents,” the NMHC said. Anything below 50 suggests that sales volume is decreasing.
Furthermore, political and regulatory issues, such as rent control, are impacting regional markets. Among respondents to the survey, 62% are active in areas that either recently imposed rent control, or are considering doing so. Of this group, approximately 20% indicated they cut back on investments or developments in these markets. Meanwhile, an additional 60% are considering making changes in the future.
The information is based on data that comes from quarterly surveys of NMHC members. Survey responses indicate the change, if any, from the previous quarter.
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