The apartment markets continue to enjoy largely favorable conditions, noted NMHC Chief Economist Mark Obrinsky. Although both owners and managers are well aware of the shadow rental market condos and single family homes originally intended for sale but being rented out instead—any supply spillover from the for-sale market has so far not exceeded the growing demand for apartment residences.”
One-third of respondents said that occupancy rates and or rents rose during the first quarter of the year. As a result, the survey’s Market Tightness Index edged up slightly to 56. (For all four of the survey indexes, a reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates that conditions are worsening; and a reading of 50 indicates that conditions are unchanged.) In most markets, conditions were largely unchanged according to 43 percent of respondents.
The long-term demographics favoring rental housing namely the coming of age of the echo boomers and strong immigration level make the sector a favorite among equity investors. Although the Equity Financing Index fell slightly to 53 from 56 in the last quarter, it was still the 15th straight over-50 reading. Equity capital for investment in apartments remains widely available as evidenced by the 71 percent of respondents who considered conditions unchanged compared to three months earlier.
