For the first time in the National Multi Housing Council’s Quarterly Survey’s history, at least 60 percent of responses to each question indicated conditions were unchanged from the previous quarter, meaning that apartment industry market conditions are little changed from 3 months ago.
The survey’s nearly unchanged results indicate that market conditions are beginning to steady: “This quarter saw a continued uptick in sales volume and equity financing, which represent another step, albeit a small one, toward a more normal transactions market, after 2009 recorded the lowest number of transactions in the decade,” says Mark Obrinsky, chief economist for NMHC.
The Sales Volume Index reading was above 50 for the second consecutive quarter, indicating that sales volume around the country is increasing. (For all indexes, a reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates worsening conditions; and a reading of 50 indicates that market conditions are unchanged.)
“The weakest performing index is the Market Tightness Index, underscoring the fact that full recovery of occupancy and rents will require job growth to return to the economy,” Obrinsky says. “When that happens, and as a large wave of Echo Boomers begins to enter a supply-constrained market, we should see above average rent growth.”
The Market Tightness Index’s reading of 38 indicates that vacancy and/or rent conditions deteriorated over the last quarter. The survey found that 30 percent of respondents said markets were looser – meaning higher vacancies and/or lower rents. Only 7 percent reported that markets were tighter.
Other survey findings included the Equity Financing Index reading of 66 – the highest reading for this index since April 2004 – which indicates that equity finance conditions continue to improve. One-third of survey respondents said equity financing was more available than last quarter.
Additionally, the Debt Financing Index was 49 for January 2010, indicating that conditions have changed very little from 3 months ago.
For full survey results, visit www.nmhc.org/goto/QuarterlySurvey.