The National Multihousing Council (NMHC) has recently released their Quarterly Survey of Apartment Market Conditions – see the data here. 

Here are some quotes from the NMHC’s VP of Research and Chief Economist, Mark Obrinsky and the recent press release -

“Nine straight months of job losses have begun to cut into the demand for apartment residences,” said Mark Obrinsky, NMHC’s Vice President of Research and Chief Economist.  “While favorable demographics and a lower homeownership rate will benefit the apartment industry over time, owners and managers will first have to work their way through the current economic downturn before the benefits of that increased demand are likely to show up.  Until then, economic worry will cause some people to “double up” by moving in with a friend or returning to their parents’ house.”

The Market Tightness Index, which measures changes in occupancy rates and/or rents, dropped from 40 last quarter to 24.  This was the fifth straight quarter in which the index has been below 50.  (For all of the survey indexes, a reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates that conditions are worsening; and a reading of 50 indicates that conditions are unchanged.)  In the previous four quarters, however, roughly half of respondents viewed market conditions as unchanged; this quarter less than one-third reported unchanged conditions, suggesting that the current situation is less stable.

“Unlike other commercial real estate sectors, such as offices and hotels, the apartment sector has benefited from continued debt capital availability through Fannie Mae and Freddie Mac,” noted Obrinsky.  “That capital source is not sufficient to protect apartments from the current credit crisis, however.  Our indexes for equity and debt financing set record low levels, as other sources of capital have left the market.  This has contributed to a record-low reading for property sales as well.”

It should be noted that the Index values reported are tabulations of survey data – sentiment is running fairly negative across the board it seems these days.  The take home – there are multifamily markets that are performing quite well despite the economy – do your research. 

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