Apartments: Market Conditions Tighten

Apartment Sector Sets Records In Market Tightness And Equity Availability, NMHC Market Conditions Survey Finds

Contact: Michael Tucker

For Release: May 5, 2011

WASHINGTON, DC – The apartment industry’s recovery continues briskly, according to the National Multi Housing Council’s (NMHC) latest Quarterly Survey of Apartment Market Conditions.

The Market Tightness Index, which examines vacancies and rents, rose to a record 90 from 78 last quarter.  For all indexes, a reading above 50 indicates improving market conditions.  Almost four in five respondents (79%) said markets were tighter (lower vacancies and/or higher rents) and—for the first time ever—not a single respondent thought conditions were looser.


“Investors are well aware of the apartment recovery and are eager to deploy capital in the sector,” noted Doug Bibby, NMHC’s President.  “Sales volumes are still rising, which suggests that more investors are willing to ‘pull the trigger’ at current cap rates.”

Key findings include:

  • The Market Tightness Index rose to a record 90 from 78. Nearly 80% of respondents reported tighter markets; none said markets were looser.  This is the fifth straight quarter that the index topped 50, which indicates improving conditions.
  • The Equity Financing Index rose to a record-high 76 from its previous record of 74. Fifty-four percent indicated that equity financing conditions were better than three months earlier—also a second-straight all-time high.  A mere 1% regarded conditions as worse.  This is the seventh quarter in a row where more respondents said equity financing conditions were improving.
  • The Sales Volume Index increased to 65 from 62. This was the seventh consecutive quarter the index has been above 50, indicating improving sales volume.  Thirty-seven percent of respondents said sales volume was higher this quarter.
  • The Debt Financing Index rose to 69 from 48. Just under half of respondents said borrowing conditions were unchanged compared to three months ago.  But 44% indicated that conditions had improved and only 7% said conditions had worsened compared with three months ago.  Yields on Treasury securities are down by roughly 40 basis points over this time, which likely accounts for the rise in this index.


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