"The weak results from November were similar to October regarding occupancy, and recent comments from management on conference calls indicated that there is an increasing propensity to double up or share smaller apartments," comments Dustin Pizzo, an analyst with BofA.

As concessions become the norm, landlords are being more aggressive. More than half of property managers said they increased the amount of concessions they are offering over the prior month. The incentive index fell nearly 10 points to 25.5, marking the fifth month in a row below 50. Scores were in the teens in Atlanta, Los Angeles, Seattle and Phoenix, while Dallas was the only city that was able to hold steady on or reduce incentives. "Managers will continue to struggle with finding a balance between rental rates and occupancy," says Pizzo.

One of the biggest factors weighing heavily on apartments is the competition from the single-family overhang.

Whereas construction of rental apartments is minimal—about 67% of those polled said there is none or only a little competition from new multifamily projects—the excess supply in the for-sale market is proving to be a formidable force. Roughly 60% of survey participants said these units pose some or significant competition. The single-family competition index rose 4.9 points to 43.1 in November.

For the next four to six months, BofA is cautious on apartment REITs, since the negative factors seem to outweigh the positives given the weak economy, rising unemployment and uncertainty over the future. The firm favors companies with "niche defensive plays," such as Essex Property Trust, and "healthy balance sheets and limited near-term development risk," as is the case with Equity Residential.