Apartment Market Conditions Tighten Nationwide
Aug 2010 02

Considering a September 1st move?  Rent increasing next year?  Don’t understand why apartment buildings, management companies and individual owners are not offering lower rates or negotiating as much as they did last year?

According to the National Multi Housing Council’s Quarterly Report released May 7th, the “Market Tightness Index” has nearly doubled nationwide, explaining the easement of pressure on those responsible for renting out apartments here in Boston.  This index measures the change in occupancy rates and/or rents in the market.  As the index number increases, so do rental rates, and the number of vacancies decreases (more people are staying where they are).  This was the highest figure in nearly four years (see Calculated Risk’s graph below) and it certainly explains the decreased availability of quality product throughout the city this year, as well as the lack of incentive companies and owners have had to “make deals”.

(reading above 50 suggests vacancy rate decline)

For more information, please read on for a few key quotes or follow the link below to read NMHC’s full News Release regarding the report.

From the National Multi Housing Council (NMHC): Apartment Industry Shows Widespread Improvement According to NMHC Quarterly Survey of Market Conditions:

The Market Tightness Index, which measures changes in occupancy rates and/or rents, rose sharply from 38 to 81. This was the highest figure in nearly four years. Fully 64 percent of respondents said markets were tighter (meaning lower vacancies and/or higher rents). Only two percent reported looser markets. This is the sixth straight increase for this measure.

“We saw a sharp increase in the Market Tightness Index, which fits with the surprisingly strong (for a seasonally weak period) effective rent growth. … Even so, a sustained recovery in the apartment market needs a firm economic and demographic foundation … in the near-term the industry’s prospects still depend upon a stronger rebound in both the job market and household formation.” [said NMHC Chief Economist Mark Obrinsky]

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