WASHINGTON, D.C. — The apartment market showed signs of strengthening in the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for April 2019. The Market Tightness (52), Equity Financing (53), and Debt Financing (81) indexes were all above the breakeven level (50), while the Sales Volume index (45) improved, but still showed some continued softness on property sales.
“Even as overall economic growth slowed somewhat in the last quarter of 2018 and the first quarter of 2019, the apartment market has rallied,” noted NMHC Chief Economist Mark Obrinsky. “Thirty percent of respondents saw stronger rents and occupancy levels, the most since July 2015. Strong demand for apartments across the country continues to underpin the apartment industry’s strong fundamentals.”
Additionally, not one respondent reported worsening debt financing conditions. This is a first in the survey's 20-year history. In contrast, 61 percent of respondents noted improving conditions—likely the result of falling interest rates over the last three months.
"With the Fed no longer tightening, possibly easing over the remainder of the year, debt finance could provide a boost to property sales, the one area of weakness in the April survey," said Obrinsky.
- The Market Tightness Index increased from 46 to 52, indicating overall improving conditions for the first time since October of 2015. Nearly one-third (30 percent) of respondents reported tighter market conditions in the three months prior compared to 25 percent who reported looser conditions. Almost half (45 percent) of respondents felt that conditions were no different from last quarter.
- The Sales Volume Index rose from 33 to 45. Over one-quarter (28 percent) of respondents reported lower sales volume compared to three months earlier, while half (50 percent) noted unchanged volume. Nineteen percent of respondents, on the other hand, reported higher sales volume.
- The Equity Financing Index climbed from 50 to 53. This marks the sixth straight quarter of improving or unchanged conditions. Sixteen percent thought equity financing was more available than in the three months prior, compared to only nine percent who believed equity financing was less available. For the eighth consecutive quarter, the majority of respondents (61 percent) reported unchanged conditions in the equity market.
- The Debt Financing Index jumped from 59 to 81. The majority of respondents (61 percent) reported better conditions for debt financing compared to the three months prior. Not a single respondent thought that conditions for debt financing were less favorable. At the same time, nearly one-third (32 percent) reported unchanged conditions.
About the Survey:
The April 2019 Quarterly Survey of Apartment Market Conditions was conducted April 8-15, 2019; 132 CEOs and other senior executives of apartment-related firms nationwide responded.