Real Estate Central

WASHINGTON, Aug. 7 /PRNewswire-USNewswire/ — The ongoing turmoil in
the financial markets is affecting the apartment sector, according to the
National Multi Housing Council’s (NMHC) latest Quarterly Survey. Overall
apartment demand is holding up fairly well in the face of a sluggish
economy, though there was a small decline in market tightness. Sales volume
is down and both equity and debt capital are less available.

“Demand for apartment residences is holding up relatively well despite
the weakening job market and sluggish economy. If employment continues to
fall, however, we’ll likely see apartment demand follow suit,” noted NMHC
Chief Economist Mark Obrinsky. “At the same time, the financial markets
have still not returned to normal, with the CMBS market–and many
banks–effectively sidelined.”

“Overall,” Obrinsky added, “the apartment industry remains reasonably
well as a result of continuing fallout from the for-sale housing market and
the fact that apartment firms did not overbuild during the latest economic
cycle.”

The Market Tightness Index, which measures changes in occupancy rates
and/or rents, decreased from 44 last quarter to 40 this quarter. For all
four 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.

More than twice as many respondents said markets were looser rather
than tighter, although about half of respondents said market conditions
were unchanged from the previous quarter. Of the four measures in the
Quarterly Survey, this one has held up the best over the last year.

This is the fourth straight Market Tightness Index measure under fifty.
The job market weakening–employment has fallen in each of the last seven
months–seems to have been largely offset by the substantial shift from
owning to renting over the last two years.

The Sales Volume Index increased slightly to 17. Although this index
figure increased this quarter, it was well below 50, which signals
widespread deterioration in transaction activity. Seventy percent of
respondents said sales volume was lower than it had been the prior quarter,
while only four percent said it was higher.

The Sales Volume Index now has been below 50 for eleven consecutive
quarters. At first, this decline was attributable to the withdrawal of
condo converters from the market, but over the last year the main cause has
been the unsettled state of the financial markets.

The Debt Financing Index declined by nearly half again from the
previous quarter, from 22 to 13. This is the second-lowest reading on
record for this index, and the fifth consecutive quarter where the reading
was under fifty.

The Equity Financing Index declined to an all-time low of 11. No
respondent said equity financing was more available than it was three
months ago (for the first time ever) and nearly fourth-fifths of
respondents said it was less so.

Full survey results are posted at http://www.nmhc.org/goto/QuarterlySurvey08.
Note: The July 2008 Quarterly Survey was conducted July 28-August 4, 2008;
89 CEOs and other senior executives of apartment-related firms nationwide
who serve on NMHC’s Board of Directors or Advisory Committee responded. The
April 2008 Quarterly Survey was conducted April 28-May 5, 2008; 87
responded. The July 2007 Quarterly Survey was conducted July 23-30, 2007;
80 responded.

Based in Washington, DC, NMHC is a national association representing
the interests of the larger and most prominent apartment firms in the U.S.
NMHC’s members are the principal officers of firms engaged in all aspects
of the apartment industry, including owners, developers, managers and
financiers. Nearly one-third of Americans rent their housing, and over 14
percent live in a rental apartment. For more information, contact NMHC at
202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC’s web site
at http://www.nmhc.org.

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[Via Real Estate Newswire]