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Statement from the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) in response to President Trump’s State of the Union address:
“On behalf of the apartment industry, the 39 million Americans who call apartments home and the 12.3 million whose jobs are supported by the industry, we applaud President Trump and his administration’s focus on economic growth and job creation through infrastructure development, the ongoing federal regulatory overhaul and the recently reformed tax code.
“Last night the President made it clear that infrastructure is a top priority this year. As lawmakers develop legislation, NMHC/NAA are focused on ensuring that housing and local infrastructure that impact the cost of housing are key components of any infrastructure package. With housing demand continuing to grow, policymakers must take advantage of this moment to drive new residential investment, support community-level infrastructure and promote transit-oriented and high-density development.
“By 2030, there will be 94 million more people in the U.S. than there were in 2000. All of these people need somewhere to live and work. Last year’s tax reform package and the overhaul of the federal regulatory landscape go a long way towards protecting and enhancing the multifamily industry’s ability to serve the millions of Americans who live in apartments.
“We look forward to working with the administration and policymakers on a job-creating infrastructure package that helps the multifamily industry build the 4.6 million new units that are needed to meet surging demand.”
Apartment market conditions continued to soften according to results from the January National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions. The Market Tightness (36), Sales Volume (40) and Debt Financing (38) Indexes landed below the breakeven level of 50, while the Equity Financing Index increased to 58. In addition, the survey found that half of respondents expect green financing to increase in 2018.
“The latest survey results underscored the prevailing view at our recent Apartment Strategies Conference that we are late in the current cycle,” said NMHC Chief Economist Mark Obrinsky. “While some seasonality comes into play, the Market Tightness Index was a little below its long-term January average, indicating market conditions are slightly weaker than normal. Demand for apartments overall remains strong and equity capital still looks favorably on the apartment sector. However, many owners are satisfied with their holdings and more inclined to stand pat.”
The Market Tightness Index decreased one point to 36 – the ninth consecutive quarter of declining conditions. Just 14 percent reported tighter conditions compared to the previous three months, compared to 42 percent of senior executives who reported looser conditions.
The Sales Volume Index declined from 45 to 40. Nearly one in five (19 percent) indicated higher sales volume, whereas 38 percent reported declining sales volume over the previous quarter.
The Equity Financing Index remained increased from 46 to 58, reversing an eight-quarter decline of market conditions. Twenty-seven percent of respondents reported equity financing was more available over the previous three months, with just 11 percent reporting looser conditions.
The Debt Financing Index declined from 51 to 38, with over a third (36 percent) of respondents reported worse conditions for debt compared to the three months prior. Eleven percent indicated that conditions were more favorable.
Half of respondents expect green financing to increase in 2018 (excluding the 29 percent of respondents who reported “don’t know”). Almost one-third (31 percent) expect volumes to be flat compared to 2017, while almost one-fifth (19 percent) expect more difficulty obtaining financing.
About the Survey:
The January 2018 Quarterly Survey of Apartment Market Conditions was conducted January 16-23, 2018; 144 CEOs and other senior executives of apartment-related firms nationwide responded.
The National Multifamily Housing Council (NMHC) elected Sue Ansel, President and CEO of Gables Residential, to serve a two-year term as the Council’s Chairwoman at its Annual Meeting last week.
As Chairwoman of the apartment industry’s leading voice, Ansel outlined her priorities over the coming years focusing on several areas of critical importance to the industry: Innovation, Diversity and Inclusion, Legislative and Regulatory Issues and the growth of the NMHC Foundation. In addition, under her leadership NMHC will continue to make clear that renting is a desirable housing option.
Ansel noted the exciting times ahead of the apartment industry, “The possibilities ahead for us are enormous. There is $2 billion in venture capital focused on our industry, up from $400 million two years ago. These emerging technologies will change the way we build, manage and monitor our communities, how we interact with our residents and much more.”
Building on that theme, NMHC released new data and insights on the apartment of tomorrow and a web site with visualizations of how the industry might respond to the coming wave of disruption and deliver the 4.6 million new apartments the U.S. will need by 2030 to meet demand.
NMHC also announced the appointment of the following officers for two-year terms:
Vice Chairman: David Schwartz, Co-founder and CEO of Waterton Associations, Chicago, IL
Treasurer: Ken Valach, CEO of Trammell Crow Residential, Dallas, TX
Secretary: James Schloemer, CEO of Continental Properties, Milwaukee, WI
Statement from the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) following the release of tax reform legislation by the House Ways and Means Committee.
“NMHC/NAA applaud the House Ways and Means Committee release of tax reform legislation. While we are continuing to review the legislative language, the tax reform package, as currently written, looks to encourage economic growth and job creation while protecting the multifamily industry’s ability to serve the 39 million Americans who call apartments home and the 12.3 million jobs supported by the multifamily sector and its residents. Critically, the Tax Cuts and Jobs Act would preserve interest deductibility, like-kind exchanges and other provisions important to the apartment industry.
“There is a long process ahead before tax reform becomes law. As the debate continues, we will continue to work with lawmakers to highlight the importance of the multifamily industry and emphasize how tax reform is critical to developing the 4.6 million more apartments that the country will need by 2030. As tax reform legislation is considered in both houses of Congress, it is critical that any final bill should:
- Protect flow-through entities;
- Retain the deduction for business interest;
- Maintain like-kind exchanges;
- Ensure depreciation rules avoid harming real estate;
- Preserve capital gains treatment of carried interest; and,
- Protect the Low-Income Housing Tax Credit (LIHTC).”
More information about apartments and tax reform is available at protectthelease.com.
Market conditions for the apartment industry remained soft in the National Multifamily Housing Council’s (NMHC) October Quarterly Survey of Apartment Market Conditions. While the Market Tightness (37), Sales Volume (45) and Equity Finance (46) Indexes remained below the breakeven level of 50 – with the Debt Financing Index (51) edging just above 50 – there was little change compared with three months earlier.
“The apartment market is headed into a seasonally slow leasing period with new deliveries easing upward pressure on rents and occupancy rates in many markets around the country,” said NMHC Chief Economist Mark Obrinsky. “The big increase in multifamily starts in 2015 and 2016 is finally filtering through to the marketplace on a broad basis.”
“Leasing activity appears to have picked up in Texas and Florida in the aftermath of Hurricanes Harvey and Irma. Some respondents also noted that fires on the West Coast may be pushing occupancy rates up,” said Obrinsky. “Elsewhere, new deliveries are leading to concessions becoming more commonplace.”
The Market Tightness Index decreased from 42 to 37, marking the eighth consecutive quarter of overall declining conditions. Forty percent of respondents reported looser conditions than three months prior, compared to just 14 percent who reported tighter conditions.
The Sales Volume Index declined two points to 45. Over a quarter (28 percent) of respondents indicated lower sales volume compared to the previous three months, compared to 19 percent who reported higher volume over the past quarter.
The Equity Financing Index remained unchanged at 46, with almost two-thirds (62 percent) reporting unchanged conditions. This marks the eighth consecutive quarter of declining conditions.
The Debt Financing Index increased from 47 to 51, crossing the breakeven level of 50 for the first time since July 2016, indicating improving overall conditions. While most respondents (62 percent) reported unchanged conditions, 14 percent believed that conditions for debt financing had become more favorable. Conversely, 12 percent of respondents reported worse conditions for debt financing compared to three months prior.
About the Survey:
The October 2017 Quarterly Survey of Apartment Market Conditions was conducted October 10-October 17, 2017; 139 CEOs and other senior executives of apartment-related firms nationwide responded.
View the full data online at nmhc.org/QS-October-2017
All four indexes of the National Multifamily Housing Council’s (NMHC) July Quarterly Survey of Apartment Market Conditions remained slightly below the breakeven level of 50, the fourth consecutive quarter indicating softening conditions. The Market Tightness (43), Sales Volume (47), Equity Financing (46), and Debt Financing (47) Indexes all improved from April, but still hovered just below 50.
“All four indexes are below 50 but rising, suggesting that the softening is less wide-spread than in previous quarters,” said Mark Obrinsky, NMHC’s SVP of Research and Chief Economist. “Despite some softness at the high end of the apartment market—due to construction having finally ramped up to the level needed—demand for apartments will continue to be substantial for years to come.”
The Market Tightness Index edged up from 41 to 43, as almost half of respondents (48 percent) reported unchanged conditions. One-third (33 percent) of respondents saw conditions as looser than three months ago, while the remaining 19 percent reported tighter conditions. This marks the seventh consecutive quarter of overall declining conditions.
The Sales Volume Index increased from 30 to 47, just shy of the breakeven level of 50. Twenty-seven percent of respondents reported higher sales volume than three months prior, compared to 33 percent that reported lower volume.
The Equity Financing Index increased four points to 46, with almost a quarter (24 percent) of respondents believing that equity financing was less available than three months prior. Sixteen percent thought that equity financing was more available compared to three months ago.
The Debt Financing Index increased from 41 to 47, showing a similar trend to the equity market. While a quarter of respondents (25 percent) reported worse conditions for debt financing compared to three months prior, another 19 percent disagreed, believing conditions had become more favorable.
About the Survey:
The July 2017 Quarterly Survey of Apartment Market Conditions was conducted July 10-July 17, 2017; 123 CEOs and other senior executives of apartment-related firms nationwide responded.