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WASHINGTON — For the sixth quarter in a row, the apartment industry improved across all indexes in the National Multi Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions. The survey’s indexes measuring Market Tightness (76), Sales Volume (54), Equity Financing (58) and Debt Financing (77) all measured at 50 or higher, indicating growth from the previous quarter.

“The apartment sector’s strength continues unabated,” says NMHC Chief Economist Mark Obrinsky. “Even as new construction ramps up, higher demand for apartment residences still outstrips new supply with no letup in sight. Despite the need for new apartments, acquisition and construction finance remains constrained in all but the best properties in the top markets.”

Key findings include:

• Financing is available, but only for top markets. Only 16% reported acquisition capital being available in all markets at all times. Even fewer (10%) stated that construction capital was available across markets.
• For the first time in a year, more than half (55%) of respondents said that markets were tighter. By contrast, only 2% reported the markets as loosening and 43% reported no change over the past three months.
• Nearly one quarter (24%) of respondents reported increased sales volume, compared to 16% who indicated decreased volume and 55% who reported conditions as unchanged since the last quarter.
• Equity financing marked 12 straight quarters of positive activity (Equity Financing Index at or above 50).
• Debt financing was the highest it’s been in two years. Only 2% reported borrowing conditions as being worse from the previous quarter.

WASHINGTON — Market conditions continue to improve for the multifamily housing industry across all areas, according to the latest National Multi Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions.

For the seventh time in eight quarters, all four indexes reflecting Market Tightness, Sales Volume, Equity Financing and Debt Financing were at or above 50, indicating growth from the previous quarter. This is good news for the multihousing laundry business.

“In the face of an unprecedented virtual shutdown of development, the apartment market continues its strong recovery as developers play catch-up to the growing demand for rental housing,” says NMHC Chief Economist Mark Obrinsky. “Investors continue to view apartments as a preferred asset class in today’s environment, and long-term demographic changes favor rental housing.”

Even so, NMHC expects the pace of improvement in transaction activity to ease moving into 2012. The survey reflects nearly continuous recovery over the past two years.

Development activity continues to increase in most markets, with just over half of responding NMHC members (53%) reporting a substantial pickup in land acquisition, lining up financing, and getting building permits, though not much yet in the way of actual construction starts.

Full survey data are available here.

WASHINGTON — Commercial real estate vacancy rates are flat and projections for growth have been moderated because economic growth and job creation have been weaker than expected, but modest improvements are expected over the coming year, according to the National Association of Realtors®.

The weakening economy will slow the growth in demand for space, says Lawrence Yun, NAR chief economist. “Disappointing economic growth in recent months means a slower recovery for most of the commercial real estate sectors, although multifamily housing continues to benefit from pent-up demand resulting from an abnormal slowdown in household formation in recent years.

“Many young people, who normally would have struck out on their own from 2008 to 2010, had been doubling up with roommates or moving back into their parents’ homes. However, they’ve been entering the rental market as new households in stronger numbers this year. As a result, apartment vacancy rates are declining and rents are rising at faster rates.”

Growth in the Gross Domestic Product slowed to 0.4% in the first quarter and 1.3% in the second quarter, much lower than the 4-5% expansion needed after a recession.

“A healthy recovery is already occurring in the multifamily sector, with average apartment rent expected to rise 2.5% this year and another 3.2% in 2012,” Yun says. “Normally, rising rents correspond to rising home prices. However, this isn’t happening in this recovery because buyers are constrained by unnecessarily restrictive mortgage underwriting standards.”

Looking at commercial vacancy rates from the third quarter of this year to the third quarter of 2012, NAR forecasts vacancies to decline 0.3 percentage point in the office sector, 0.6 point in industrial real estate, 0.7 point in the retail sector and 0.9 percentage point in the multifamily rental market.