National Multifamily Housing Council
Quarterly Survey of Apartment Market Conditions
(July 2016)
 

 

Market Tightness Index1

Sales Volume Index2

Equity Financing Index3

Debt Financing Index4

July 2016

43 50 44 62

April 2016

43

53

45

50

January 2016

47

46

46

37

October 2015

53

53

52

54

July 2015

61

53

49

35

April 2015

58

52

55

60

January 2015

51

44

55

71

October 2014

52

58

54

71

July 2014

68

56

58

68

April 2014

56

52

53

63

January 2014

41

41

50

42

October 2013

46

46

39

41

July 2013

55

46

49

20

April 2013

54

55

56

59

January 2013

45

49

56

57

October 2012

56

51

56

65

July 2012

76

54

58

77

April 2012

74

57

62

65

 

The reported index numbers are based on data compiled from quarterly surveys of NMHC members. Survey responses reflect the change, if any, from the previous quarter. The indexes are standard diffusion indexes, hence are convenient summary measures showing the prevailing direction and scope of changes. They are calculated by taking one-half the difference between positive (tighter markets, higher sales volume, equity financing more available, a better time to borrow) and negative (looser markets, lower sales volume, equity financing less available, a worse time to borrow) responses and adding 50. This produces a series bounded by 0 (if all respondents answered in the negative) and 100 (if all respondents answered in the positive).

1 A Market Tightness Index reading above 50 indicates that, on balance, apartment markets around the country are getting tighter; a reading below 50 indicates that market conditions are getting looser; and a reading of 50 indicates that market conditions are unchanged.

2 A Sales Volume Index reading above 50 indicates that, on balance, sales volume and the country is increasing; a reading below 50 indicates that sales volume is decreasing; and a reading of 50 indicates that market conditions are unchanged.

3 An Equity Financing Index reading above 50 indicates that, on balance, equity finance is more available; a reading below 50 indicates that equity finance is less available; and a reading of 50 indicates that equity finance availability is unchanged.

4 A Debt Financing Index reading above 50 indicates that, on balance, borrowing conditions are improving; below 50 indicates that borrowing conditions are worsening; a reading of 50 indicates borrowing conditions are unchanged.

For the complete historical series, please visit www.nmhc.org/quarterlysurvey.

 

INDEX TRENDS

Quarterly Survey charts July 2016-01


SURVEY QUESTIONS
 

Question #1: How are apartment market conditions in the local markets that you watch?
“Tight” markets are defined as those with low vacancies and high rent increases. Conditions obviously vary greatly from place to place, but on balance, apartment market conditions in your markets today are:

 

July 2016

April 2016

July 2015

Tighter than three months ago

18%

18%

37%

Looser than three months ago

31%

32%

14%

About unchanged from three months ago

 51%

 51%

49%

Don’t know or not applicable

 0%

 0%

 1%

 

Question #2: What about sales of apartment properties in the local markets you watch? The sales volume (number of deals) currently is:

 

July 2016

April 2016

July 2015

Higher than three months ago

 23%

 26%

 28%

Lower than three months ago

 22%

 21%

 22%

About unchanged from three months ago

 48%

 46%

 44%

Don’t know or not applicable

 8%

 8%

 6%

   

 

Question #3: What about equity financing for apartment acquisition or development? Considering both price and non-price terms, equity financing today is:

 

July 2016

April 2016

July 2015

More available than three months ago

14%

12%

15%

Less available than three months ago

27%

23%

 16%

About unchanged from three months ago

 50%

 53%

 59%

Don’t know or not applicable

 8%

 13%

 10%

 

Question #4: What about the conditions for multifamily mortgage borrowing? Considering both interest rates and non-rate terms, compared to three months ago:

 

July 2016

April 2016

July 2015

Now is a better time to borrow

 47%

 19%

 8%

Now is a worse time to borrow

 22%

 18%

 38%

About unchanged from three months ago

 27%

 53%

 45%

Don’t know or not applicable

 4%

 10%

 8%

 

Question #5: Apartment property prices nationally have surpassed their previous peak, leading some to wonder if we're seeing the beginning of a new price "bubble". In the markets you're familiar with, do you think property prices are generally: 

 

 

Excluding Don’t Know

Undervalued - NOI growth should be clearly better than today's cap rates suggest. 

0%

 0%

Normal - fully justified based on current NOI and cap rates. 

 27%

 27%

Frothy - investors will be adequately rewarded if recent NOI trends continue and cap rates don't back up. 

 53%

 54%

Bubbly - investors are likely to be disappointed unless NOI increases are above average and cap rates compress further. 

 19%

 19%

Don’t know / not applicable

1%

N/A

Note: The July 2016 Quarterly Survey of Apartment Market Conditions was conducted July 11-July 18, 2016; 120 CEOs and other senior executives of apartment-related firms nationwide responded. The April 2016 Quarterly Survey of Apartment Market Conditions was conducted April 4-April 11, 2016; 147 CEOs and other senior executives of apartment-related firms nationwide responded. The July 2015 Quarterly Survey of Apartment Market Conditions was conducted July 20-July 23, 2015; 154 CEOs and other senior executives of apartment-related firms nationwide responded.