According to the latest data, neither rising home-sales nor surging multifamily construction is impacting on the impressive vacancy rates in the US apartment market, with rates continuing to fall despite strong rents across the country.
The latest National Multi Housing Council's (NMHC) Quarterly Survey of Apartment Market Conditions shows improvement across all areas and all four indices - 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 of the report included:
The market tightness index saw the biggest jump, up from 45 in March to 54 in April. April was the 13th quarter that the index has been above 50, 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. Almost one-third (30 percent) reported sales volume was higher while only 20 percent indicated that sales volume was lower.
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.
The Equity Financing Index remained at 56, unchanged from the previous two quarters
Debt Financing Index increased by two points to 59. One quarter of respondents viewed now as a better time to borrow compared with three months ago, while six percent viewed now as a worse time.
- Tuesday 23 April 2013