Multi-Family Sales Reach 4-Year High in Q309: NMHC

The apartment market shows signs of increased sales activity and relaxing credit availability compared to three months ago, according to a quarterly survey from the National Multi Housing Council (NMHC), The survey measures its indices and assigns a number representing that part of the market’s condition. For the Q309 report, 53 CEOs and other senior executives of apartment-related firms serving on NMHC’s board of directors responded. The Sales Volume Index reached its highest level in four years, and the Equity and Debt Financing Indices hit a three-year peak. However, the survey showed that market tightness – or the measurement of vacancies and rent levels – continued to indicate worsening conditions. Surveyors assigned market tightness a 31, an increase from 20 in the previous quarter. All other indices reached levels above 50. Index numbers below 50 indicate distressed conditions. “The broad improvements in sales volume and debt and equity financing suggest the transactions market may finally be thawing,” noted NMHC Chief Economist Mark Obrinsky. “Nearly half (45%) of respondents indicated that the gap between what sellers are asking for and what buyers are offering—the bid-ask spread—has narrowed.” Obrinsky added that economic headwinds remain strong as unemployment remains high, decreasing demand for apartment residences. “Though this quarter’s Market Tightness Index is improved compared to last quarter, it still indicates higher vacancies and lower rents,” Obrinsky says. The commercial property market is beginning to post improvement in other metrics. A study from the MIT Center for Real Estate showed transaction prices rose 4.4% on commercial real estate properties sold in Q309 as the price buyers are willing to pay rises and the price sellers are willing to take decreases. Write to Jon Prior.

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