NMHC Quarterly Survey Shows Apartment Market Largely Unchanged

Impact of Homeownership Moderating in Some Markets

WASHINGTON, DC -- Conditions in the apartment sector remain soft, according to the National Multi Housing Council’s (NMHC) latest quarterly Survey of Apartment Market Conditions (April 2003), but almost 20 percent of respondents report the pace of residents leaving to buy homes is slowing.

"Right now, it’s all about jobs," said NMHC’s Chief Economist, Mark Obrinsky. "Demand for apartment residences remains below normal levels in most metro areas and is likely to stay that way until we see a sustained pickup in employment. Until then, apartment markets are just treading water."

"The increase in homeownership is compounding the situation for rental housing providers," noted Obrinsky. When asked about the impact of owner-occupied housing on rental demand, 54 percent said the pace at which apartment residents are leaving to buy houses remains the same as it has been the past two years. Nineteen percent said they have noticed fewer residents leaving for homeownership, suggesting the worst may be over in some markets. Nevertheless, 27 percent say the pace has increased recently.

Other Survey findings include:

• The Market Tightness Index, which captures rent increases and vacancy changes, rose slightly to 32, up from January’s index of 29. (A Market Tightness Index of less than 50 indicates that market conditions are getting looser.) The Market Tightness Index has hovered around 30 since hitting a record low of 4 in January 2002.
  
  
• Sales volume remains steady, with the Sales Volume Index rising to 48 from 41 in January, but below the 58 recorded in October 2002. (A Sales Volume Index of less than 50 indicates the volume of sales decreased in more markets than it increased.)
  
  
• Financing conditions improved marginally from already-good levels. More than a quarter of respondents said debt financing (mortgage rates and borrowing terms) had improved. Almost 60 percent of respondents deemed equity financing conditions unchanged; slightly more indicated improved conditions (17 percent) than worsened (15 percent).

Full survey results are posted at www.nmhc.org/Content/ServeContent.cfm?ContentItemID=2896. NMHC’s quarterly survey was conducted via e-mail April 14-21 and was sent to CEOs and senior apartment firm executives who serve on NMHC’s Board of Directors and Advisory Committee.

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Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC's members are the principal officers of firms engaged in all aspects of the apartment industry, including ownership, development, management and financing. More than one-third of Americans rent their housing, and one in five Americans lives in an apartment. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's web site at www.nmhc.org.

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