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Apartment Sector Shows Improving Conditions in April

Apartment markets improved in April in all categories, according to the ""National Multi Housing Council's"":http://www.nmhc.org/ (NMHC) April Quarterly Survey of Apartment Market Conditions.

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All four of the survey's indexes--Market Tightness, Sales Volume, Equity Financing, and Debt Financing--came in above 50, which marks the point between improving and deteriorating conditions. April's gains reverse findings made in January, when Market Tightness and Sales Volume dropped below 50 for the first time since 2010.

According to NMHC, the Market Tightness index rose to 54, a leap from 45 in the previous quarterly survey. The index has been above 50 for 12 of the past 13 quarters, with only January 2013 showing a decline. One-quarter of respondents reported tighter markets, up from 16 percent last quarter.

Meanwhile, the Sales Volume Index increased from 49 to 54. Thirty percent of those surveyed reported higher sales volume, while 20 percent indicated lower volume.

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The Debt Financing Index increased two points to 59, with 25 percent of respondents saying it is a better time to borrow now (compared to three months ago). Six percent said current conditions make today a worse time to borrow. According to NMHC, this was the ninth consecutive quarter in which the share of respondents who thought debt financing had worsened was in the single digits.

Finally, the Equity Financing Index stayed flat at 56 for the third straight quarter. That index has remained above 50 for 15 consecutive quarters now, and this was the seventh quarter in a row in which the most common response was that equity finance conditions were unchanged from three months ago.

While both financing indexes were on the positive side, financing remains constrained, NMHC says. One in ten respondents reported construction financing being available for all types of apartments in all markets, and only about 25 percent thought acquisition financing was available for all properties in all markets.

""The apartment industry is operating on cruise control, as the expansion continues unabated,"" said Mark Obrinsky, NMHC's VP for research and chief economist. ""While concern about overbuilding has begun to crop up, demand for apartment residences remains strong. ""New construction"":http://www.themreport.com/articles/multi-family-boosts-march-housing-starts-permits-slip-2013-04-16 may have finally recovered fully, but most units under construction won't be delivered until 2014 or later. The dearth of recent completions has contributed to relatively low product availability. As deliveries increase, we expect to see an even greater pick-up in sales volume.""

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