A host of 2007 fourth-quarter reports show continued vitality in the multifamily housing arena. The Washington, D.C.-based National Association of Realtors noted in its December Commercial Real Estate Outlook that while investment activity has slowed, vacancy rates in multifamily are expected to tighten in 2008, leading to rent increases. NAR forecasts multifamily vacancy rates to average 5.4 percent for the fourth quarter of 2007, down from 5.9 percent in 2006. Average rents are also targeted to increase slightly. Markets with the lowest vacancies noted in the NAR report include New Jersey, Salt Lake City, San Jose, San Diego, Nashville, and Philadelphia—all have vacancy rates of 3.3 percent or less.

According to the Korpacz Real Estate Investor Survey by New York City-based PricewaterhouseCoopers, investors will be challenged in 2008 by continued market instability and uncertainty about the economy. “As a result ... in 2008 we may see a period in which fewer transactions are completed, underwriting standards tighten, marketing times increase, and cap rates and sales processes undergo requisite adjustments,” the firm's U.S. real estate leader Tim Conlon said in the report. The survey indicated that many investors still prefer apartments as a long-term asset class. While sales volume in the third quarter of 2007 fell 8 percent from 2006 in the apartment sector, comparable volumes for the office, retail, and industrial sectors were down 40 percent.

Moody's Investors Service is also bullish on the multifamily sector. In January, the New York City-based ratings agency gave multifamily the strongest outlook among seven commercial property types in a comparison of income fundamentals.