Cap rates actually seem to be ticking down across the board, by some 25 basis points. Caps on deals in top-tier markets could see declines of 50 basis points going forward, on average, and secondary markets are likely to see a decline of 25 basis points. Denver, San Diego, Chicago, Atlanta and Phoenix have already seen deals with cap rates of 6.5% or less.

The parties behind the sales offerings could be behind this trend. While REITs and institutions accounted for the majority of sellers last year, they are relatively absent from the field this year, and private players and lenders have stepped up to fill the void. In fact, lenders selling properties out of REO have become a key force in the market, more than doubling their dispositions to 33% this year. Most of the assets are traditional—lenders are still holding onto the big, high-quality properties—but the motivations behind the increased pace are smaller deal sizes and the relative ease of financing.

All of this, however, doesn't mean the sector is out of the woods. The inventory of distressed apartment properties rose by $660 million in February to total almost $32.8 billion. The new additions to that pool—which have actually declined 21% over January—included $1.3 billion in new trouble, $286 million of resolutions and $391 million in restructured property. Among the deals that took during that month was KBS Realty's mezzanine takeover of the unsold condominium units in Manhattan's Tribeca Summit and HSBC's refinancing of its own matured construction that was syndicated to build the Ritz-Carlton Residences in Baltimore.