During the post-recession recovery, two apartment-transaction indicators have clearly been positive: the percentage of the asking price at which properties closed has increased steadily; and the number of months to close has gradually declined. In the past year, though, these two indicators appear weaker, as the CoStar apartment data show (see chart below).

After 2010, average transaction prices rose from about 92 percent of the asking price to more than 100 percent. While this happened, the average number of months to close declined from roughly 2.6 to 2.3. These changes were consistent with the strong multifamily recovery and the increased liquidity associated with it. But, beginning in 2013, the number of months to close went back up to 2.6. Similarly, in the first two quarters of 2014, the average ratio between the transaction and asking prices dropped below 99 percent.

Interestingly, the number of months to close has been stickier in this recovery than before the downturn, probably because of extra loan processing and due diligence. Meanwhile, the transaction-to-asking-price ratio has been more volatile, surpassing the levels seen in the years preceding the recession.

This trend reflects natural investor hesitation in a maturing multifamily market, and it’s consistent with other transaction patterns. For example, the year-over-year growth rate in combined Q1 and Q2 sales volume has gradually decreased every year since 2011, when it was almost twice that of 2010. Growth rates were 20 percent in 2012, 16 percent in 2013 (excluding the Archstone–AvalonBay–Equity Residential deal), and 15 percent thus far in 2014.

Another example is the propensity of key multifamily market participants to become net buyers. Up until 2013, investment managers and property operators were on the net buying side. And thanks to Archstone–Avalon Bay–Equity Residential, real estate investment trusts (REITs) booked a net buying position. In the first two quarters of 2014, however, they’ve all moved to a more neutral stand, with their sales roughly offsetting their purchases.

Whether these trends confirm that multifamily transaction activity has peaked is unclear. A few more data points are needed to determine whether the turn in the cycle is real. But if multifamily fundamentals eventually soften, one thing is certain: Purchases become more selective, cap rates increase, and prices flatten.

Although a large wave of apartment property dispositions doesn’t seem immediate, apartment buyers could be less engaged, gradually looking for opportunities in other property sectors and turning into net apartment sellers. At that point, we’ll have more-concrete evidence that the peak many are calling for will have already been reached.

Luis Mejia is director of U.S. Multifamily Research for CoStar Portfolio Strategy, a division of the CoStar Group. He can be reached at lmejia@costargroup.com.