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Faltering Economy, Oversupply of Units Hurt Rental and Condo Markets
Builder confidence in the multifamily housing market sagged in the third quarter of 2008, pushing both the Multifamily Condo Market Index (MCMI) and the Multifamily Rental Market Index (MRMI) to their lowest levels since the National Association of Home Builders created the indexes in 2003.
The MCMI, which gauges current and expected supply in the condominium market, sank into single digits for the first time: the index value for current conditions stood at 8.1 in the third quarter, dropping more than five points from 13.5 at the same time last year.
Apartment builders are not optimistic about the next six months, either—the component tracking expectations for supply for market-rate apartments fell from 47.1 in the third quarter of last year to 19.1 in the third quarter of this year. Affordable housing developers were even more pessimistic: the component of the index tracking their expectations for supply over the next six months slipped to 20.3 in the third quarter of 2008, down from 39.1 at the same time a year ago.
According to David Seiders, even in those markets where the rental apartment demand and supply are in balance – or where demand exceeds supply— multifamily developers have been unable to get new projects started because of the ongoing credit problems in the capital markets. Since early this year, NAHB has ratcheted down its forecast for multifamily housing starts substantially.
View the full press release.
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