Despite the increases, "cap rates in the 8%-range remain very attractive," says Jeff Algatt, M&M's regional manager. "We're less flashy and less volatile than other East Coast markets, but fundamentals are stable; there's limited new construction and steady demand. Low prices relative to other markets will continue to attract out-of-state investors." He tells GlobeSt.com that 65% of his firm's 2005 multifamily sales were to out-of-state investors.

"The buyer universe is changing," he says. "It's normalizing, and today's buyers aren't looking for a huge run-up in a short time. They aren't flippers; they are more conservative, comfortable with increasing income over a longer term."

The overall multifamily vacancy rate has not exceeded 4.6% nor fallen below 3.4% in any quarter since 2003. Effective rents have risen 3.3% over the past 12 months, and this follows an increase of 1.9% the previous year. Algatt projects a 3.5%-increase this year, and adds, "there's something of a shift to class B and C properties, because single-family housing affordability is competing with class A rentals. If you're paying $3,000 a month, you can buy; but, if you're paying $875, that's not a mortgage payment." With this year's anticipated increase, the area's overall median rent rate is projected at $955 a month.