NMHC Survey: April Apartment Market Weak COVID-19 Outbreak Impacting Sales Nationwide

Shocking absolutely no one, the National Multifamily Housing Council (NMHC)'s recently-released Quarterly Survey of Apartment Market Conditions for April 2020 shows unit sales and other indicators slumping as the residential real estate industry has confronted the ongoing COVID-19 pandemic. The survey looked at market tightness, sales volume, equity financing, and debt financing indexes, finding that all came in well below the break-even level.

Stay-at-home orders and social distancing directives from public health and government officials to stem the tide of coronavirus infection have residents doing exactly that, said NMHC Chief Economist Mark Obrinsky. “As a result, much of the nation’s economic activity has been put on hold. With upwards of 20 million Americans now out of work, it is not surprising that 82 percent of respondents reported looser market conditions this quarter, and that just 5 percent observed a tighter market.”

“In the market for apartment sales, many respondents appear to have adopted the ‘wait-and-see’ attitude,” Obrinsky continues, noting that COVID-19 has created too much uncertainty around asset pricing for much of any transactions to occur. “There are some buyers out looking for deals at the moment, but few sellers are willing to adjust prices downward. Only 1 percent of respondents reported higher sales volume, the lowest on record since 2008.”

In terms of numbers, the survey found that: 

  • The Market Tightness Index decreased from 48 to 12, indicating looser market conditions. The vast majority (82 percent) of respondents reported looser market conditions than three months prior, compared to 5 percent who reported tighter conditions. A small portion (12 percent) of respondents felt that conditions were no different from last quarter.

  • The Sales Volume Index slid from 43 to 6, with 90 percent of respondents reporting lower sales volume than three months prior. While a small group of respondents (5 percent) deemed sales volume unchanged, a mere 1 percent of respondents reported higher sales volume.

  • The Equity Financing Index dropped from 61 to 13, the first quarter of the last 10 to mark worse conditions for the equity market. Seventy-five percent of respondents reported that equity financing was less available than in the three months prior, while no respondents believed equity financing was more available, several respondents (15 percent) thought that conditions were unchanged in the equity market.

  • The Debt Financing Index dipped from 68 to 20, with nearly three-quarters (71 percent) of respondents reporting worse conditions for debt financing compared to the three months prior, while just 10 percent felt that financing conditions were more favorable. A number of respondents (10 percent) felt that conditions were unchanged in the debt market.

  • The April 2020 Quarterly Survey of Apartment Market Conditions was conducted from April 13 through April 20, 2020; 241 CEOs and other senior executives of apartment-related firms nationwide responded.

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