The numbers are grim. Multifamily housing starts fell 20.4 percent from November to December 2008 to an annual rate of 152,000, according to U.S. Commerce Department.

So when might things get better? Most apartment developers believe that, as in all real estate sectors, the lenders are holding things up. “A lot of people are bidding on deals, but developers can’t get projects started,” says James Pyle, president and CEO of LandSouth Construction, a general contractor in Jacksonville Beach, Fla.

But Marc McAndrew, executive vice president with real estate banking at PNC, a Pittsburgh-based lender, says not all lenders have exited the marketplace. Case in point: PNC closed three construction loans in January totaling $278.9 million. But developers won’t be able to get the same terms as in the past few years. “If you can no longer get 90 percent loan-to-value of purchase in a refinance, then you feel like financing is no longer available,” McAndrew says. “The truth is that financing is available for apartments. The profile [of the borrower] is a well-capitalized operator with the financial wherewithal to support the loans in strong markets that underwrite on today’s rents.”

Herman and Kittle Properties in Indianapolis has some active projects. But the developer has sought financing from the Federal Housing Administration’s Sec. 221(d)(4) program, where banks don’t carry the risk of the loans. Though spreads are high with the loans right now, they feature 90 percent loan-to-cost and a 40-year amortization window. “At this point, every deal we try to make, we stay in the HUD box,” says Todd Sears, vice president of finance for the company.

Sears hopes to see the conventional market open up in late 2009. He’s not alone. “I don’t see things changing until the fourth quarter of this year,” says Robert Lopez, project manager for UCON Corp., a New York-based apartment and condo developer.