NMHC housing survey results released

NMHC survey resultsEvery quarter, the National Multi-Housing Counsel, or NMHC, conducts a national survey to determine the trends of the rental housing market.  The results for the October 2010 survey were released by NMHC today.  The market news continues surprisingly positive.

 There are 4 questions asked each quarter and the responses are reduced to Indexes for the four question areas:  sales volume, debt financing, equity financing, and market tightness.  Survey results, in the form of a downloadable Excel spreadsheet, can be found at:  www.nmhc.org/goto/5920.  

In October 2010, all four market areas showed signs of improvement; many areas hitting record highs.  

The local market 

These market improvements are mirrored in the turnover data of my own office, Lightner Property Group, where 4 months ago we had pending notices to vacate in the high 20’s.  Now our pending notices to vacate numbers are fewer than 10.  In addition during the same period, we had more than four times the number of units being marketed than we have today.  Finally, we are asking more for our available units.  Fewer turnover units and increased asking prices shows the San Francisco market is in sync with national trends.

National survey results:  sales-debt-equity and market tightness 

 The NMHC survey shows national sales volume in October was at a NMHC housing survey resultsrecord high of 84, up from the prior quarter of 78.  For 2010, the annual average for sales volume is 73.  Again, another record high.    

Debt financing, or the institutional lending market, showed only a small increase of 1, increasing from 81 to 82.  Interestingly, not a single respondent indicated borrowing was worse than the prior quarter; another record. 

Equity financing, decreased slightly from 73 to 70, ending the year with an overall average of 70, again another record.  A score of 70 indicates a strong equity market. 

Finally, the Market Tightness level decreased from 83 to 77.  Market tightness measures the changes in occupancy and rent levels.  The break-even mark is at 50, so the market is clearly strong.  The 2010 average was 70, which is a number not seen since 2006, long before the financial collapse and burst of the housing bubble. 

So, what does this all mean?  

Without doubt, the rental market has benefited from the increase in the number of renters.  At least some of the increase in rental activity is related to the national move away from homeownership back to the rental market.  When the housing market was booming, and everyone could qualify for a mortgage, renters were hard to find and the rental market suffered.  Now the trend has reversed. 

Market dampers 

But while strong, the rental market has been kept controlled by the fact the job market continues to be weak.  A fragile job market translates into fewer new households, which keeps the rental market frail.  A market resulting from a typical pendulum swing would be much stronger than what we currently see.  Perhaps this tempered market will last longer and not end with the crash we typically see when the market wildly swings back and forth, and back again.  

The equity and debt markets are strong, suggesting that there is confidence in rental housing and residential rental real estate.  But the market confidence may be the result of investment funds having nowhere else to go.  Having been burned by stocks, the “for sale” residential real estate market and other equity investments, it is not surprising that investment income property is seen by investors as the safer bet right now.  While there is little hope for the killer returns seen in development and dot com style stock investments, investment income property performs well in times of inflation, providing a safe haven for cash in these times when the Fed pumps out dollars as fast as the ink can dry on the paper. 

Overall, market tightness is up.  Rental rents are increasing nationally, as well as locally.  Vacancies are down and units turn faster. Vacancy loss from rental turnover continues to decrease.

All market conditions point to a strong and healthy residential rental market.  If the job market can start to grow, perhaps we can find that balance between the two types of real estate investment: the rental and for-sale housing markets.  With a healthy job market, both the rental and for-sale markets can exist synergistically, allowing the economy to begin the absorption of the glut of for-sale housing.  

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For a complete look at the historical survey series, visit NMHC at:  http://www.nmhc.org/Content/Library.cfm?NavID=79. 

National Multi Housing Council announces 1st Quarter market report

Residential market conditions show improvement.

The National Multi Housing Council (NMHC, Washington, DC) has released the results for their quarterly survey of market conditions, according to Michael Tucker in a May 7, 2010 press release. 

For over a decade, the organization has surveyed CEOs and other senior executives of apartment-related firms who serve on the Board of Directors or Advisotry Committee in four key areas:  market tightness, sales volume, equity financing and debt financing.  The quarterly nationwide results are available to interested persons HERE.

April 2010 numbers reveal an improving residential rental market. 

• Market tightness made the largest gain quarter over quarter by increasing, meaning demand and rents are up. 
• Sales volume is up, indicating the market is moving again and there are both buyers and sellers in the marketplace. 
• Equity financing is generally available, indicating there is interest in the market and optimism for residential real estate. 
• Finally, debt financing showed slight signs of improvement, indicating it was more available than it was in January 2010 by returning to levels reported in October 2009. 

For a complete look at the historical numbers since 1999 visit:  www.NMHC.org/goto/QuarterlySurvey09.

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