A lot of the reason behind the strength of the multifamily segment is the financing available to it. While Wall Street and other capital sources have pulled back from the market, government agencies like Freddie Mac and Fannie Mae upped their business, more than doubled their financing of apartment acquisitions in the last half of 2007. In fact, they remain the primary source of debt capital in the market today. Still, Real Capital's team concludes, they are not able to fill the gap left by CMBS lenders.

Wall Street loan totals fell 85% during 2007 while and national and international banks, which typically securitize paper, also decreased their activity. Regional and local banks, the firm says, tended to favor other sectors, particularly because many of them were burned by failed condominium conversions and have a high exposure to residential and multifamily. Insurance companies, another large group of portfolio lenders, also slowed their financing of apartment acquisitions in the second half in favor of office. International banks such as HSH Norbank, Barclays, Westdeutche, Anglo-Irish and Heleba capitalized on these conditions, upping their lending in the last half of 2007.

Still, Real Capital concludes that volume could be higher were it not for the gap between seller expectations and what buyers are willing to pay. The average sales price as a percentage of the original asking price fell to 94% compared to slightly more than 95% right before the credit crunch hit at the end of last summer. Cap rates too have changed only slightly, particularly for high-quality assets.