Confidence in Apartment Sales, Credit, Even Occupancies Declines, NMHC Reports

NMHC just posted their quarterly survey of apartment market conditions. Of the 70 respondents, 43 (61%) felt that conditions were looser (higher vacancy, lower rent growth) than three months ago. An additional 20 (29%) felt that conditions were unchanged. The number of respondents who felt conditions were worse (looser) jumped from 35% to 61% from the prior quarter and from 26% from the same period in 2007. Nearly 60% acknowledged that current credit conditions had a material impact on current and planned business activities.

Equity and debt availability (or its perception thereof) was at the lowest confidence in over 10 years. Unable to read this in table form, I threw together this quick graph for further analysis. Looking at the history of the survey (50 is neutral) sentiment for debt and market tightness moved inversely until October 2006 when everything fell of a cliff.

The survey measures investor sentiment so it imperfectly reflects debt and equity availability. The Q2 MBA survey of commercial and multifamily originations has more quantifiable data. In that survey, commercial and multifamily originations were down 63% over Q2 2007 and fell to their lowest level since Q1 2004.

Quarterly reports from Q3 2004 onward.

Echoing this falloff was an item I saw in MBA Newslink on October 30th providing this summary of an RBC report:

“Fannie Mae and Freddie Mac continue to finance 80 percent to 90 percent of multifamily transactions across different regions of the country, supplemented mostly by local and regional banks, RBC reported.”

I’ll guess that any non-conforming deals simply cannot be done at any reasonable LTV these days. I’m still looking or the RBC report but please send it along if you have a link.

HT: Multifamily Executive