Economy Watch: Apartment Market Stays on a Roll; Nation's Corn Crop Withers

For the sixth quarter in a row, the apartment industry improved across all indexes in NMHC's survey; the Agriculture Department's latest report on the nation's corn crop is far more pessimistic.

The National Multi Housing Council reported more good news for apartment landlords on Monday. For the sixth quarter in a row, the apartment industry improved across all indexes in the NMHC’s Quarterly Survey of Apartment Market Conditions. The industry, in short, is in clover, and even the prospect of new product development isn’t dampening its high spirits. 

The survey’s second-quarter index measuring the tightness of the market came in at 76; sales volume was 54; equity financing tallied 58; and debt financing stood at 77. Since a score of 50 or more indicates growth, all four indexes registered upward movement.

 “The apartment sector’s strength continues unabated,” remarked NMHC chief economist Mark Obrinsky. “Even as new construction ramps up, higher demand for apartment residences still outstrips new supply with no letup in sight. Despite the need for new apartments, acquisition and construction finance remains constrained in all but the best properties in the top markets.”

 Corn Crop Crippled

 Corn farmers, on the other hand, are having a very different time of it this year. The U.S. Department of Agriculture reported on Monday that the prolonged, intense drought in many parts of the Midwest has withered much of the U.S. corn crop. Losses of this magnitude have implications for consumer prices in the mid-term, since corn is used in so many ways. For example, the widespread use of corn to make animal feed will send meat prices up shortly. 

According to the Agriculture Department, only 24 percent of the corn crop in the 18 main corn-growing states is in “good to excellent” condition, while 48 percent is “poor or worse.” A normal yield on corn is 146 bushels per acre, says the department — and this year’s crop might be 130 bushels per acre or less. The last time the crop was so poor was in 2002, when the average per acre was 129.3 bushels. 

Only 29 percent of the nation’s soybean crop—another important factor in consumer food prices—is in good shape, the Agriculture Department reported. But if rains pick up in the dry areas, there’s still time to improve the soybean crop. Corn apparently isn’t going to be reprieved his late in the game. 

Investors Look to Central Banks

Investors waited on Monday for word on what two central banks with somewhat different functions would do: the Federal Reserve and the European Central Bank. The question surrounding the Fed is whether it will go in for another round of bond-buying in a bid to give the U.S. economy a shot in the arm. As for the ECB, the question is more fundamental: will it buy weak-nation debt and become more like a central bank for a nation (the European Union) that isn’t really a nation?

 Investors are hopeful about the ECB, at least. Spanish 10-year debt was down to 6.61 percent on Monday and Italian yields were at 6.03 percent. Those rates are still high, but not quite as ravenously high as last week. 

Wall Street was in a wait-and-see mode on Monday, with the indices barely moving. The Dow Jones Industrial Average lost 2.65 points, or a scant 0.02 percent, while the S&P 500 declined 0.05 percent and the Nasdaq was down 0.41 percent.