Through August, multifamily starts on buildings of five units or more were off by nearly 25 percent, as developers increasingly found it difficult to secure financing for new deals. Linwood Thompson, managing director of multifamily brokerage firm Marcus & Millichap, predicted at the 2008 Multifamily Executive Conference that even steeper declines would be in store for 2009.

"This will be a good thing for the industry-in three years," he said, referring to a likely increase in the value of existing apartment investments as demand for rental apartments grows, exceeding the supply.

In fact, Marcus & Millichap remains bullish on U.S. apartments, primarily due to the fact that the rental market is not overbuilt. "We don't have the ground saturated with apartments," said Thompson, who noted that his firm's brokerage business is off 45 percent to date in 2008.

Overall, the economy has begun to affect multifamily development, as apartment growth slows in most major metropolitans. "When the U.S. comes out of this-and it will-there will be issues in terms of job losses, capacity, and production," said Hessam Nadji, managing director of research services at the firm. Nadji did note, however, that payrolls were not nearly as bloated during the recent boom as they have been during past periods of economic growth. As a result, job losses will be stemmed slightly. He predicted that we are halfway through the tide of unemployment that the country will see during this recession.

That said, operating fundamentals are stable, so the gap between buyers and sellers that has widened in recent months will eventually narrow again. "Normally, buyers and sellers disagree on price by 5 percent to 10 percent," said Thompson, adding that the gap can typically be bridged. With the cost of debt financing going up 125 basis points to 200 basis points, and equity financing harder to come by, "all of a sudden, you have a difference of 25 percent," he noted.

"Ultimately, I think apartments will come out of this turbulence we're in right now with renewed strength," Thompson added.