Apartment market shows signs of improvement

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The apartment industry is still battling a soft market as a result of the recession, but there are signs of improvement according to the National Multi Housing Council's latest Survey of Apartment Market Conditions, which was recently released. |ret||ret||tab|

When asked about local market conditions, 12 percent of respondents said conditions were tighter, with lower vacancies and higher rent increases than three months ago. This is up from just 1 percent in the first quarter. Additionally, fewer respondents reported worsening conditions 43 percent felt that conditions were looser than three months ago, compared to the 94 percent who said conditions were looser in the survey done in January of this year. |ret||ret||tab|

As a result, the Market Tightness Index rose for the first time in eight quarters. |ret||ret||tab|

The index is a leading indicator that shows the prevailing direction and scope of changes in market conditions from the previous quarter. For the second quarter of this year, the index was 35, a strong rebound from the last quarter's historically low index of 4. A score below 50 means there are more markets with softening conditions.|ret||ret||tab|

The index reading of 35 this quarter is the highest since January 2001, suggesting that respondents are beginning to feel better about local conditions.|ret||ret||tab|

Survey respondents also were asked to compare the current recession with the recession of 1990-1991. |ret||ret||tab|

Despite the continued weakness, apartment experts were in widespread agreement that this downturn is milder than the earlier recession. Fully 82 percent said this recession is milder, and 55 percent indicated they believe the industry is better equipped to handle it. A small minority 12 percent thought it was just as bad, and 5 percent thought it was worse. |ret||ret||tab|

"Resident demand for apartments continues to soften as a result of the economic downturn," said Mark Obrinsky, the council's chief economist. "This has translated into higher vacancy rates, even though the industry began to reduce new apartment construction early in 2000 in response to the economic slowdown. Apartment demand is likely to remain flat until we see solid job growth. Once the downturn has ended, however, compelling demographics will cause resident demand for apartments to increase. After more than two decades of declining numbers, the population in the traditional renting years (age 20-29) is expected to increase by more than 1.5 million by 2010."|ret||ret||tab|

Based in Washington, DC, the National Multi Housing Council is a national association representing the interests of apartment firms in the U.S. Its members are the principal officers of firms engaged in all aspects of the apartment industry, including ownership, development, management and financing. |ret||ret||tab|

Additional information about the organization is available online at |bold_on|www.nmhc.org.|ret||ret||tab|

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