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WASHINGTON, DC—Apartment market conditions significantly weakened in the National Multifamily Housing Council's Quarterly Survey of Apartment Market Conditions for April 2020. The survey found that indexes tracking Market Tightness (12), Sales Volume (6), Equity Financing (13), and Debt Financing (20) all came in well below the breakeven level of 50.

The reason for these declines, of course, is the economic havoc brought on by the coronavirus.

Pricing is Unclear

"With upwards of 20 million Americans now out of work, it is not surprising that 82% of respondents reported looser market conditions this quarter, and that just 5% observed a tighter market," says NMHC Chief Economist Mark Obrinsky in prepared comments.

Obrinsky also said that there has been too much uncertainty around asset pricing for deals to occur and many respondents appear to have adopted a 'wait-and-see attitude. "There are some buyers out looking for deals at the moment, but few sellers are willing to adjust prices downward. Only 1% of respondents reported higher sales volume, the lowest on record since 2008," he said.

Indexes Speak to Financing, Market Tightness

Here is what the various indexes say about current market conditions.

The Market Tightness Index decreased from 48 to 12, indicating looser market conditions. The vast majority (82%) of respondents reported looser market conditions than three months prior, compared to 5% who reported tighter conditions. A small portion (12%) of respondents felt that conditions were no different from last quarter.

The Sales Volume Index slid from 43 to 6, with 90% of respondents reporting lower sales volume than three months prior. While a small group of respondents (5%) deemed sales volume unchanged, a mere 1% of respondents reported higher sales volume.

The Equity Financing Index dropped from 61 to 13, the first quarter of the last 10 to mark worse conditions for the equity market. Seventy-five percent of respondents reported that equity financing was less available than in the three months prior, while no respondents believed equity financing was more available, several respondents (15%) thought that conditions were unchanged in the equity market.

The Debt Financing Index dipped from 68 to 20, with nearly three-quarters (71%) of respondents reporting worse conditions for debt financing compared to the three months prior, while just 10% felt that financing conditions were more favorable. A number of respondents (10%) felt that conditions were unchanged in the debt market.

The survey was conducted April 13 through April 20, 2020. 241 CEOs and other senior executives of apartment-related firms nationwide responded.