Strong Q2 2012 Leads to Positive 2013 Outlook

Oct 16

Written by: THE CABOT GROUP
10/16/2012 8:07 AM  RssIcon

Submitted by J. Debes
Second quarter results for multifamily this year were very good leading analysts to project another banner year ahead for market-rate housing.

Q2 Results:

  • MPF Research reported that effective rents for new leases grew 1.2% for the top 100 metro markets in the second quarter, a 4% increase from the prior year.  The company also reported an occupancy rate of 95.2%, up from 94.9% in the first quarter
  • Rents in most parts of the country have past pre-recession levels
  • Marcus & Millichap reported apartment sales volume of $24.9B in Q2 2012, a 39% increase from the prior year.  Average $/unit was $101K at a 6.2% cap rate

2013 Projections:

  • Marcus & Millichap expects the national apartment vacancy rate to fall to 4.4%, the lowest in 11 years with rent growth in the 3.5%-4% range
  • Multifamily construction in prime markets is expected to increase.  Industry averaged 300,000/year from 1997-2006 but has not topped 200,000 since 2008.  Demand is expected to continue to outpace supply for years to come creating shortages of market-rate housing
  • Homeownership has steadily declined from 69.2% in 2004 to 65.5% in Q2 2012 with each percentage point equating to approximately 1M households.  NMHC analysts predicting ownership to drop below 60% range in the years to come
  • Financing will remain tight - in the latest NMHC quarterly Survey of Apartment Market Conditions, 65% of respondents reported acquisition financing available for only top-tier locales

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