Two different reports paint an improving picture of apartment distress.

In the most recent quarterly report from New York–based Real Capital Analytics (RCA), the market research firm said that new instances of apartment-market distress fell to $1.5 billion in the first quarter of 2012, the lowest quarterly total since 2007. Most of those cases are coming from maturity defaults of CMBS loans. Work-out activity also slowed last quarter, totaling $1.9 billion after coming in at $5.2 billion for the first quarter of 2011, according to RCA.

Work-outs exceed inflows of distress as lenders have reduced apartment distress by 14 percent over the past year. Domestic banks and agencies have led the pack by reducing their distress by more than 20 percent over the past year. They’ve cleared 60 percent of their problem loans since the downturn began. CMBS lenders are behind them, clearing only about 40 percent of distress, according to RCA.

Outlining the problems in CMBS across commercial real estate, a report from New York–based Fitch Ratings said that U.S. CMBS delinquencies rose for the second straight month while the volume of real estate–owned (REO) assets continued to climb as 2007-era loans began to mature. New 2007 delinquencies topped $1 billion in each of the past three months.

Along with the industrial sector, the apartment sector is a bright spot in CMBS, with distress falling to 11.64 percent in April from 12.61 percent in March, according to Fitch. The liquidity is obviously there for apartment owners to handle their maturity issues, though Nick Ingle, director of capital markets for the Phoenix office of Hendricks and Partners, sees potential problems for these top-of-the-market loans.

“There were many properties purchased in 2006–07 at a high basis that could still be in trouble,” Ingle says.

Distress is down in every market across the country over the past six months, with the exception of the Washington, D.C., suburbs; Chicago; Dallas; and Houston, according to RCA. Former bubble markets such as Atlanta, Las Vegas, and locales in the Southeast saw the most resolution. In fact, Ingle says pricing has reached an inflection point in markets, such as Las Vegas, where you see traditional sales. It’s no longer dominated by distress. But there’s still lender activity in these markets.

“You’re still seeing assets being taken back,” says Ingle. “Vegas saw a couple of REO properties go to market this week.”

In Florida, Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach, Fla., says distressed deals are few and far between. “It’s getting more and more difficult to find distressed apartment properties down here,” he says. According to Fitch and RCA, that’s pretty much the consensus everywhere.