WASHINGTON, DC—Fundamentals remain solid for the multifamilyasset class in the second quarter of 2014, according to theNational Multifamily Housing Council's quarterlysurvey of Apartment Market Conditions. Thatobservation includes a still-favorable supply-demand dynamic forowners and developers—an issue that is raised more and more oftenas the apartment industry recovery heads into its fourth year.

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For the moment, though, all is well, says NMHC Senior VicePresident of Research and Chief Economist MarkObrinsky in a prepared statement. "Most markets appear tobe absorbing new supply with no downward pressure on rents orvacancies," he says. "The increase in demand continues to outstripthe pickup in new supply.”

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The NMCH showed growth in all four indexes that make up thesurvey, with the market tightness (68), sales volume (56), equityfinancing (58) and debt financing (68) indexes all posting quarterover quarter improvements. In addition, this quarter's surveymarked the second quarter in a row with those four categoriesposting above the breakeven level of 50.

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Other trends the survey picked out included the still strongpropensity for urban development, compared to suburban developmentin the last six months, with four in ten, or 43%, reporting anincreased share in urban development, compared to one-quarter, or27%, reporting an increased share of suburban development.

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Interestingly, the development that is taking place in thesuburbs is mimicking the styles that are so popular in thecities—namely town-center type projects.

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Findings from the survey included:

  • A rise in the Market Tightness Index from 56to 68. The percentage of respondents who saw looser conditionscontinued to decline, down from 20% to 15%.
  • A slight increase in the Sales Volume Indexfrom 52 to 54. About half, or 51%, of respondents felt that salesvolumes were unchanged from three months earlier; almost one-thirdof responses (29%) reported a higher sales volume, and 16% reporteda lower number of sales.
  • The Equity Financing Index rose five points to58, with the majority of respondents at 56% reporting that theavailability of equity financing is unchanged from three monthsago.
  • The Debt Financing Index increased to 68 from63. Almost one-third (30%) believed that conditions are better, andonly 3% felt that conditions were worse, a marked decline fromJanuary's Quarterly Survey, when 30% felt conditions wereworse.

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