Some Positive News on the Multifamily Front

 

The index for low rent projects fell to 32.8 from 35.4. But it was up from 21.8 a year earlier. Condo projects took an even harder hit, falling to 14.5 from 21.5 and 15.2 a year earlier.
Courtesy of NAHB

Second-quarter NAHB Multifamily Market Indices (MMI) showed significant improvement in the current conditions for multifamily rental occupancy. All three classes of rental apartment indices rose significantly from first quarter and from a year earlier.

Class A jumped from 42.4 to 59.5, its highest level since the first quarter 2007. Class B increased from 41.6 to 57.6, its highest level since the third quarter 2007. And Class C rose from 40.8 to 56.6, its highest level since the fourth quarter 2007.

The indices for the outlook for rental occupancy over the next six months also projected improvement. The Class A index rose to 58.8 from 50.2 and 38.4 a year earlier. Class B was up to 56.2 from 51.4 and 44.2 a year earlier. Class C increased to 56.7 from 50.7 and 48.7 a year earlier.

Improvements in occupancy have not translated into increased construction activity, largely because of the difficulty to obtain financing. Only the index on current conditions for starts for market rate rental properties showed improvement, rising to 34.4 from 30.1 and 16.7 a year earlier, its best level since second quarter 2008. This encouraging news will help out landscape installations, six to nine months down the line.

Expectations for projects for the next six months were not much better, suggesting concern about obtaining financing in the future. Indices for market rental projects exhibited the most positive outlook. They remained flat at 37.7 — the highest reading since the second quarter 2008.

There is a real possibility that condo and rental property shortages will emerge in some areas of the country during the next several years as the economy improves and household formations, which have been delayed because of the economy, increase.

– Courtesy of NAHB