Apartment market improvements slow in Q3

The apartment market improved last quarter.

The apartment market had continued growth during the third quarter, but property management companies likely experienced a slowdown in the market, according to the National Multi Housing Council.

While every index level showed an increase during the third quarter, some of these actually declined for the month. Every index figure higher than 50 showed conditions for these categories experienced growth, according to the NMHC's Quarterly Survey of Apartment Market Conditions.

The index for debt financing dropped to 65 points from the previous quarter's 77. However, fewer than 10 percent of respondents noted this type of financing got significantly worse, according to the report. Equity financing fell to 56 from the previous figure of 58, but this was the 13th consecutive quarter with positive conditions.

Market tightness experienced the most significant decline, as it was at 56 during the third quarter, 20 points lower than the previous measurement, NMHC explained. This was partially due to close to two-third of respondents noting that conditions were positive during the quarter. However, growth occurred for the 11th quarter in the row. The sales volume level fell to 51 from the former figure of 54. There was close to half of respondents who noted there was not a major change in conditions.

"Even after nearly three years of recovery, apartment markets around the country remain strong as more report tightening conditions than not," said Mark Obrinsky, chief economist for the NMHC. "The dynamic that began in 2010 remains in place: the increase in prospective apartment residents continues to outpace the pickup in new apartments completed. While development activity has picked up considerably since the trough, finance for both acquisition and construction remains constrained, flowing mainly to the best properties in the top markets."

Financing issues persist last quarter
There was also many respondents who felt the financing situations was spotty, at best. The report noted that approximately 20 percent felt that capital was likely available everywhere for purchasing properties. Only 8 percent felt that construction financing was available everywhere in an equal amount. However, close to two-fifths noted construction financing was able to be obtained only in the best markets around and for the most successful property types. Nearly the same amount of those polled felt this was the case for all property types in the top markets.

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