Houston's occupancy will be 91.4%, dipping 1.3% by year's end, and rents will have climbed 2%. In 2009, the forecast calls for 90.6% occupancy, with rents staying flat.Austin will end the year with 92.4% occupancy, down 2.9%. Rents will be up 1%. In 2009, Willett said occupancy will be 90.5%, down another 1.9%, and rents will have plummeted 3% due to decreased demand.

In San Antonio, M/PF writer Kimberly O'Brien said occupancy will be 92% by the end of 2008, down 2.2% since January, but rents will have gained 2%. In 2009, occupancy will climb to 92.8% and rents will go up another 2%.

Willett's chief concern in Texas are construction levels. Dallas/Fort Worth has 20,585 units under construction; Houston, 16,300; Austin, 13,366; and San Antonio, 5,463. In terms of existing inventory, North Texas has 562,465 units; Houston, 497,010; Austin, 162,280; and San Antonio, 136,455.

M/PF includes Denver and Las Vegas in its Southwest market. Denver's occupancy will be 94.2% by year's end, down 1.1% in 2008, and rents up 2% for the year. In 2009, occupancy is predicted to drop to 93.7% and rents will rise 1%.

M/PF editorial analyst Chandra Gajjar said Las Vegas' occupancy will be 92.8% when the calendar turns, a 0.4% drop, and rents will be down 1% for the year. The 2009 prediction is 91.5% occupancy and 3% fall in rents.

[IMGCAP(2)]The shadow market from single-family houses, economic and political uncertainties and the capital markets, here and abroad, are responsible for the 2009 Doomsday picture. "Extraordinary things have occurred in the past 12 months. And, it's not over," said Hessam Nadji, senior vice president and managing director of Encino, CA-based Marcus & Millichap Real Estate Services.

Tuesday's presidential election "moved us one step closer to something being settled. But, it's just one piece of the whole puzzle," Nadji said. "The first positive step has been taken and we know where we stand. But, more importanly is the government stimulus. Those measures are beginning to take affect. It is going to take awhile, but it has started to minimize the impact."

Linwood C. Thompson, also a Marcus & Millichap senior vice president and managing director, emphasized "apartments will remain a preferred investment vehicle," echoing others who are adament that their sector isn't to blame this time. Fannie Mae and Freddie Mac have an $80-billion portfolio and only three-tenths of 1% in delinquencies.

Thompson addressed the slowdown in sales, adding the bid-ask spread is now 25% instead of the usual 10%. "Sellers are not opting for the new priciing paradigm. They're sitting this one out," he said. "There is plenty of negative news and buyers are focused on that. There is plenty of positive news down the road and sellers are focused on that."

It's no secret that the economic times have hit developers particularly hard. Thompson said they are canceling projects, slashing staffs and in some cases, closing doors. Whether it's a lender or an equity backer, there is a perception of "pervasive risk and uncertainty" that neither one wants to take at this time. "Until the bottom is confirmed, they're [equity backers] not coming back into the marketplace," he said.

Will Balthrope, senior director of Marcus & Millichap's national multi-housing group, said the sale trends this year are fewer offers, smaller deal sizes, quiet marketings, very few portfolios, re-trades and more distressed properties. He advised owners not to sell if they can hold out and told investors to buy if they can. "People who can buy in 2009 and 2010 will be very well rewarded," he predicted. "No matter how you dice it, 2010 looks to be the year that things will start to get better."