Borrowing conditions in the apartment market have improved in the second quarter as property owners benefit from the low-rate environment after the Brexit vote, according to the results of a survey from the National Multifamily Housing Council.
The NMHC reported that the Debt Financing Index from its Quarterly Survey of Apartment Conditions released Thursday reached 62 for the second quarter of 2016. A reading above the benchmark level of 50 means that borrowing conditions are improving.
In the first quarter, the Debt Financing Index reading was 50, meaning that conditions were unchanged from the previous quarter. In the second quarter of 2015, the index came in at 35, meaning conditions were worse.
Nearly half of the survey's respondents said that now is a better time to borrow versus just 8% of respondents a year ago.
The NMHC also reported that the Market Tightness Index was at 43 for the second quarter in a row, meaning that the market is getting looser.
Regarding apartment prices, a 53% majority of respondents found them to be "frothy," which means that investors will continue to be satisfied with current price levels if trends in net operating income continue.
"Apartment markets remain strong, but the surge of new apartment construction is starting to shift the supply-demand balance, particularly in the market for upscale apartments," said Mark Obrinsky, NMHC chief economist and senior vice president of research, in a news release.
"Given that most new supply is Class A, we're not seeing the same shift in Class B and C apartments. In addition, some weakness in the Market Tightness Index may be just seasonality."
