Market conditions improved, sales volumes are little changed from their recent high levels, and equity flows to the apartment sector continue to rise as investors remain committed to acquiring multifamily properties, according to the National Multi Housing Council’s (NMHC) April 2004 Quarterly Survey of Apartment Market Conditions.

“The apartment industry continues to show signs of gradual improvement,” said Mark Obrinsky, NMHC’s vice president of research and chief economist. “As the job market continues to gather strength, the foundation is being laid for a further pickup in the demand for apartment residences.”

The Market Tightness Index, which reflects changes in vacancy rates and rent increases, came in at 59, the highest level in four years. A score above 50 means more respondents saw improving conditions than saw worsening conditions over the past three months. This marks the third straight quarter of improving market conditions.

Almost one-third (32 percent) said conditions tightened over the last quarter, and only 14 percent thought conditions were looser.

After hitting a record level last year, it appears that the pace of apartment sales has not slowed at all, and has even increased a bit.

For the fourth straight quarter the Sales Volume Index was above 50.

Fully 22 percent reported higher sales volume over the past three months, while another 57 percent indicated sales were unchanged.

Equity investors also continue to seek out apartments. The Equity Financing Index reached 67, the highest ever recorded. What’s more, the index has been above 50 for seven of the last eight quarters (and it just missed that in the eighth quarter, hitting 49).

Forty-two percent of respondents–the highest ever–said that equity financing for apartments is more available than it was three months ago.

The only condition to worsen over the past three months was debt financing, and that change was a minimal response to rising interest rates, following the strong employment report for March 2004. Since debt finance has been widely available, this response doesn’t suggest any difficulty in obtaining debt financing as yet. The Debt Financing Index edged down to 47. Twenty-eight percent of respondents noted that debt financing conditions worsened, compared with 22 percent that indicated conditions had improved.

Washington, D.C.-based NMHC is a national association representing the interests of the larger and most prominent apartment firms in the United States.


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