The multifamily segment continues to see growth in demand, but capital isn't uniformly available, according to the National Multi Housing Council’s most recent quarterly survey.
The survey covered apartment market conditions for the first quarter of 2012, showing all-around improvements for the indexes of market tightness, which improved to 74 from 60; sales volume, up to 57 from 50; and equity financing now at 62 from 60.
The debt financing index, which looks at borrowing conditions, was the only rating that showed a decline, dropping to 65 from 74. It also is the only index that dropped below 50 in the past nine quarters, falling to 48 in the fourth quarter of 2010.
A number greater than 50 signifies an improvement from the last quarter.
Survey questions asked members questions like how “tight” market conditions are from three months ago — to which 49% thought it was tighter, 50% thought was unchanged and 1% thought it was looser. A market can become tighter through lower vacancy rates or higher rents, or both.
The recent data trend has led some to believe that the apartment industry will keep its steady recovery.
“Demand for apartment residences — and apartment properties — continues to grow,” said Mark Obrinsky, NMHC chief economist. “We anticipate this increasing further in the coming years due in part to the large number of younger households moving into the housing market and a greater preference shown for renting.”
Despite positive sentiments for the apartment market, the availability of capital lacks uniformity with only 17% of multifamily firms reporting that capital is available for all property types. 36% of firms said capital availability is confined to secondary and tertiary markets while 34% that only top-tier properties had capital.
“Our latest survey finds that capital is largely targeted at top-tier properties in core markets and not widely available throughout the U.S.,” Obrinsky said. “Fully 79% of respondents said capital was constrained either by property type, by market or both.”