"As long as job losses aren't too severe, the Southern California apartment market is poised to weather the housing downturn and credit crunch," says Delores Conway, director of the Casden forecast, which provides analyses of multifamily transactions, new building permits, leasing activity and employment data for Los Angeles, Orange, Riverside and San Bernardino counties. "Renting remains attractive when mortgages are harder to obtain for high-priced homes. Although the national economy is skating close to a recession, the apartment market is supported by demand for trade, regional economic strength and higher paying jobs in healthcare and professional services."

Although employment is down now, Conway anticipates job growth to pick up later this year, particularly in healthcare, business and professional services sectors as well as international trade, which bodes well for the region's multifamily sector. However if the economy stumbles and falls into a severe or prolonged recession, she adds the "generally stable" outlook would certainly change.

In Los Angeles, where the median home price is $460,000 and lending standards have tightened, Conway says apartments are a more realistic housing alternative for many households. The already high occupancy rate in the county is expected to dip a bit due to new completions of roughly one million units and the shadow market of unsold condominium units.