Apartment sales, which fell dramatically in 2008, saw the slide worsen in January. Real Capital Analytics, a New York-based research firm that focuses on the capital investment markets for commercial real estate, reported that fewer than 50 apartments, totaling less than $600 million in transactions, sold nationally in January. The number could have been higher, but Real Capital reported that about $760 million (about 45 properties) had their contracts terminated during the month.

The problem: Sellers still aren't adjusting their prices for the market. "Despite placing so much product on the market, sellers appear to be in denial as asking cap rates have increased only slightly since September to 6.4 percent," the report said. "Deals have spiked by 50 basis points over the same period, reaching 7 percent in January. Clearly, with so few closed deals, the bid/ask gap remains wide, and it is sellers who must become more realistic."

Until the gap between buyers and sellers closes, David Schwartz, managing member for Waterton Associates, an apartment firm based in Chicago, doesn't see things improving. "It will be sellers dropping their prices and then you'll start seeing transactions clear," he says.

The deals that did clear in January were generally small. The largest was $67.4 million for a three-property deal sold by Home Properties, a REIT based in Rochester, N.Y. Only one other deal sold for more than $30 million.

The report also highlighted another trend. "Default and foreclosure filings involving significant apartment properties grew by almost $1.8 billion," the report said. "At present, distressed apartment assets total $9.2 billion [906 properties], a figure that continues to grow rapidly. Troubled properties are now found in nearly every market."

As a result, all signs point to a future where sales will mostly be comprised of distressed assets. But the sellers stuck under those assets haven't opted to move them yet.

"Its no surprise that deals aren't trading yet," says Matt Wanderer, a principal atAlterra Capital Group, an apartment owner based in Miami. "Until sellers (mostly bank-owned real estate) feel regulatory pressure to unload properties at true distressed pricing, companies such as ours, which has opportunity fund capital, must remain on the sideline."