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Expected improvement in rental market giving positive outlook to multifamily market

In Buyers, Commercial Real Estate, Distressed Sales, florida, Leasing, miami, miami beach, Military, Multi-Family Real Estate, real estate, Roth-IRA, Self-Directed IRA, Sellers on June 11, 2010 at 4:31 pm

Multifamily builders less pessimistic

WASHINGTON – June 11, 2010 – The multifamily market showed signs of moving toward stability in the first quarter of 2010, according to NAHB’s Multifamily Market Index (MMI). The current production index for market-rent apartments jumped to 30.6 – 14 points higher than a year earlier – while future demand expectations for Class A apartments rose to 49.6 from 34 and for Class B to 53.1 from 43.9. For lower-rent units and for-sale condominiums, the current production indexes rose to 38.2 and 25.0, respectively – more than 10 points higher than in the first quarter of 2009.

The MMI measures multifamily builder sentiment based on production and occupancy at the current time as well as builders’ expectations for conditions over the next six months. An index number greater than 50 indicates that the number of builders who view conditions as getting stronger outnumber the number who view conditions as becoming weaker. The values are not seasonally adjusted.

The current demand index for Class A apartments – among the hardest hit by the recession ¬– also showed improvement, rising to 41.7, or 19 points higher than a year earlier. The index measuring demand for Class B apartments rose to 43.4, up seven points. Demand for Class C apartments – the least expensive, and the most likely to stay occupied during hard times – actually showed a slight decline, falling about two points to 43.1.

Builders’ expectations for future production, though improved from a year ago, are still constrained by the difficulty in obtaining loans to fund development. Condo starts showed the lowest expectation for increased starts at 32.7. The future production index for lower-rent communities is 45.1 and for market-rate rent communities 43.5.

“The most encouraging part of the MMI is the number of multifamily builders expecting gains in rental occupancy over the next six months,” says NAHB Chief Economist David Crowe. “Builders’ optimism is directly related to recent positive employment news and expectations for the trend to continue. Current conditions are still depressed by multifamily builders’ difficulty obtaining financing for acquisition, development and construction.”

Reprinted by Permission: © 2010 Florida Realtors®

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