Apartment Owners Report Improving Sales, Other Conditions

National apartment conditions could be showing signs of improvement, according to apartment owners than responded to the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions.

The market tightness index increased from 19 to 35, which indicates a loosening market. According to the survey, 49% of respondents said that market conditions were looser than in the prior three months. Only 18% of respondents said that market conditions are tighter than the prior three months, while 33% of respondents thought the market conditions were unchanged. According to NMHC chief economist Mark Obrinsky, market conditions are continuing to deteriorate, but the market tightness index shows that there is growing variation in the market outlook from respondents.

Other areas of the survey show improving market conditions. The sales volume index increased from 18 to 72, and 60% of respondents reported higher sales volume than the prior three months. This was significant majority. Only 16% of respondents in the survey said that sales volumes decreased compared to the prior three months, and 19% found the market unchanged. This data shows that investment capital is returning to the market after retreating at the start of the pandemic. Historically low interest rates and greater availability of debt has helped drive capital back to the market.

In the debt financing index, more than half—51%—of respondents are having an easier time securing financing than in the previous quarter, and 35% of respondents thought that the market was unchanged. Only 6% of respondents reported that the debt conditions were worse than the prior quarter.

Finally, the equity financing index also showed stable market conditions. Most respondents to this portion of the survey—42%—said that the market conditions for equity were unchanged from the prior three months. However, 35% reported improving conditions, while 12% of respondents found equity financing was less available that the previous quarter.

Overall, apartment owners’ outlook on the market is improving. The survey asked respondents to share their outlook on these trends, and 46% expect that these conditions will last six to 12 months beyond the end of the pandemic, while 31% of respondents believe that these trends will end when the pandemic ends. Only 8% of respondents believe that these market conditions will persist indefinitely—the most pessimistic outlook—while the additional 16% were unclear on the future of the market.