WASHINGTON, DC-There is a growing divide in price expectations between buyers and sellers in the multifamily sector, according to the findings of the National Multifamily Housing Council‘s most recent quarterly survey of Apartment Market Conditions. This growing gap is in response to the considerable equity still on the prowl for opportunities in the sector. But while that is old news for the space, the survey noted other developments that point to a slight weakening in the sector.
For instance, there was a modest decline in both sales volume and debt financing, which is largely attributable to rising interest rates. The market tightness (41), sales volume (41) and debt financing (42) indexes were all a little below the breakeven level of 50, while the equity financing index rebounded to 50.
That said, the overall message of the survey is that the apartment market is still very strong, says Mark Obrinsky, NMHC’s SVP for Research and Chief Economist, in a prepared statement. “Although markets are a little looser than in October, this is largely seasonal; overall markets remain fairly tight,” he says.
“New supply is finally starting to arrive at levels that will more closely match overall demand,” he says. “In a few markets, we are seeing completions a little higher than absorptions, but this is likely to be short term in nature.”
More fundamentally, he concludes, demand for apartment homes should be strong for the rest of the decade and beyond–provided that the economy remains on track.
About the chart: The reported index numbers are based on data compiled from quarterly surveys of NMHC members. Survey responses reflect the change, if any, from the previous quarter. The indexes are calculated by taking one-half the difference between positive (tighter markets, higher sales volume, equity financing more available, a better time to borrow) and negative (looser markets, lower sales volume, equity financing less available, a worse time to borrow) responses and adding 50. This produces a series bounded by 0 (if all respondents answered in the negative) and 100 (if all respondents answered in the positive).