Demand For Apartments Remains Strong

As housing prices drop, homeowners forced into foreclosure are packing up and moving into apartments, which are starting to run out of room. While the housing market is trying to recover from a downturn, the apartment sector of real estate is experiencing growth and high demand.

Apartment Demand Means Reveals Market Conditions

According to the National Multi Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions, the demand for apartments remains strong despite the decline of property sales that is making it harder for real estate firms to get debt and equity markets. Although the demand for rentals is high, the ability to obtain equity financing is growing increasingly difficult. The NHMC survey showed that 76 percent of respondents reported less availability for equity finance.

The number of people occupying apartments or renting has risen significantly within the past few months, with the Market Tightness Index indicating a jump from 33 at the beginning of the year to 44 as more move into smaller quarters. A reading over 50 shows that conditions are improving, so this lower reading signifies that the availability of apartments is dwindling, but the number of people moving in is on the rise.

Demand For Apartments From Ex-Homeowners

NMHC Chief Economist Mark Obrinsky said, “The bursting of the for-sale housing bubble has greatly slowed the outflow of renters into ownership. More than 80 percent of the survey respondents reported a decrease in the number of renters leaving to become homeowners.”

With thousands of homeowners facing foreclosure, some have no option but to turn to apartment living. “Even though there has been an increase in the number of condo and single-family rentals,” said Obrinsky, “these properties do not typically compete for the same renters as professionally managed apartments.” Apartment complexes managed by a professional group as opposed to an individual who rents out room is more desirable as renters want to live in the closest residence possible to their old home. The housing market may be suffering, but apartment units are going quickly.