WASHINGTON, DC-The National Multi Housing Council recently completed its quarterly survey of conditions in the nation’s apartment market and has determined things have slowed, due more to an economy teetering on the brink of recession than to an economic fallout from the September 11 terrorist attacks. In a statement, the council said 83% of its survey’s respondents said conditions in the markets in which they operate are looser than three months ago. Only 16% said conditions were basically unchanged. As a result, the market tightness index fell for the sixth consecutive quarter to a low of nine.

Nine is the lowest reading in the survey’s two-and-a-half year history. NMHC explained a score below 50 means there are more markets in which conditions are softening, as in slower rent increases and increasing vacancy. A score of 50 means no change. In response to the state of affairs, only a small minority of respondents has pulled back from development or acquisition activity in metropolitan areas where some industries were directly impacted by the terrorists’ attacks, like tourism. But 55% of the surveyed firms said they were pulling back generally from a variety of markets.

NMHC’s chief economist Mark Obrinsky said in this environment, it may be a good time to enter markets that generally have been tough to enter. “High land costs and development costs have kept new supply low, while strong demand has boosted occupancy rates and rents,” said Obrinsky. “Apartment owners in these markets have not been inclined to sell, and when they have, they’ve been able to command premium prices. Well-positioned firms with an eye toward the future may see the current economic situation as presenting not only challenges, but also opportunities.”

In one finding that contradicts larger trends, the survey said the availability and cost of debt continue to improve. Real estate experts have said in the aftermath of the terrorist attacks that financing for real estate projects generally and the lodging industry in particular would become more expensive. The debt-financing index has improved for six consecutive quarters, but the equity index has fallen in the most recent quarter, indicating equity finance is less available than in previous quarter.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.