Monday, October 21, 2013

NMHC Survey: Apartment Market Conditions Loosen in Q3

by Bill McBride on 10/21/2013 03:17:00 PM

From the National Multi Housing Council (NMHC): Apartment Markets Retreat in Third Quarter NMHC Survey

All four indexes of the National Multi Housing Council’s (NMHC) October Survey of Apartment Market Conditions dipped below 50 for the first time since July 2009. Market Tightness (46), Sales Volume (46), Equity Financing (39) and Debt Financing (41) all indicated declining conditions from the previous quarter.

“After four years of almost continuous improvement across all indicators, apartment markets have taken a small step back,” said Mark Obrinsky, NMHC’s Vice President of Research and Chief Economist.
...
Market Tightness Index fell to 46 from 55. Two-thirds of respondents (67 percent) saw no change in market tightness (higher rents and/or occupancy rates) compared with three months ago. One-fifth of respondents (up from 14 percent in July) felt that markets were looser than three months ago, while 13 percent saw tighter markets.
emphasis added
Apartment Tightness Index
Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading below 50 indicates loosening from the previous quarter. The quarterly decrease was small, but indicates looser market conditions.  

As I've mentioned before, this index helped me call the bottom for effective rents (and the top for the vacancy rate) early in 2010. This survey now suggests vacancy rates are near a bottom, although apartment markets are still tight, so rents will probably continue to increase.