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Apartment Markets Retreat in Third Quarter NMHC Survey

All four indexes of the National Multi Housing Council’s (NMHC) October Survey of Apartment Market Conditions dipped below 50 for the first time since July 2009. Market Tightness (46), Sales Volume (46), Equity Financing (39) and Debt Financing (41) all indicated declining conditions from the previous quarter. “After four years of almost continuous improvement across all indicators, apartment markets have taken a small step back,” said Mark Obrinsky, NMHC’s Vice President of Research and Chief Economist. “Conditions cannot continue to improve indefinitely and new development is at least somewhat constrained by available capital—though more on the equity than the debt side. Even so, both the Market Tightness and Sales Volume Index are within hailing distance of the breakeven level and the Debt Financing Index rose despite some rise in interest rates. This bodes well for the apartment industry going forward.” Key findings include: Opinions are mixed regarding the availability of capital for new development. A total of 77 percent of respondents regarded construction debt financing as widely available—34 percent think both equity and debt financing are widely available, while 43 percent think construction loans are widely available but equity capital for new development is constrained. Only 36 percent think equity capital is widely available. [Note: this is excluding those respondents that chose “Don’t Know/Not Applicable”]. Market Tightness Index fell to 46 from 55. Two-thirds of respondents (67 percent) saw no change in market tightness (higher rents and/or occupancy rates) compared with three months ago. One-fifth of respondents (up from 14 percent in July) felt that ma......
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Apartment Markets Resume Growth According to NMHC Survey

Apartment markets improved across all areas according to the National Multi Housing Council’s (NMHC) April Quarterly Survey of Apartment Market Conditions. All four indexes – Market Tightness (54), Sales Volume (55), Equity Financing (56) and Debt Financing (59) – came in above 50, which indicates improving conditions. This reverses last January’s findings, where Market Tightness and Sales Volume dipped below 50 for the first time since 2010. “The apartment industry is operating on cruise control, as the expansion continues unabated,” said Mark Obrinsky, NMHC’s Vice President for Research and Chief Economist. “While concern about overbuilding has begun to crop up, demand for apartment residences remains strong. New construction may have finally recovered fully, but most units under construction won’t be delivered until 2014 or later. The dearth of recent completions has contributed to relatively low product availability. As deliveries increase, we expect to see an even greater pick-up in sales volume.” Key findings include: Financing remains constrained. One in ten reported construction financing as available for all types of apartments in all markets. In addition, only one quarter thought acquisition financing was available for all properties in all markets. Market Tightness Index rose to 54 from 45. The index has been above 50 for 12 of the past 13 quarters, with only January 2013 indicating contraction. One quarter of respondents saw markets as tighter, up from 16 percent last quarter. The Sales Volume Index increased to 55 from 49. Like the Market Tightness Index, the pickup in the Sales Volume Index showed improving co......
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