According to panelist Michael Cohen, director of advisory services at PPR, it has been a pretty incredible run for the apartment market. The obvious factors that are fueling the positive trends include strong demand, the decline of homeownership, improvement in the job market and students that are coming out of universities that are coming out with very high levels of student debt, Cohen explained.

But the lack of real income growth is another factor that does have implications, Cohen continued. “I am positive on the demand side of the equation for multifamily. We have the potential for a nice long cycle here. It could be a decent cycle… apartments could realize some nice continued gains.”

Cohen also pointed out that he is noticing an increase in middle-aged renters as well. “The apartment market has really evolved.”

What stands out to panelist Greg Willet, VP of MPF Research, is the sustainability of the cycle. “If you look at the number of singles that are in the 20- to 34-year-old age category, that's about four million more than where it was 10 years ago. The number of unmarried single young adults is up about nine million from where it was a decade ago. It is a very diverse audience and we are only serving a sliver of it.”

With respect to interest rates, which moderator Farb said obviously have a pervasive impact on the real estate sector in general, panelist Jim Costello, managing director of Americas Research at CBRE, predicted that “we will still be at a low rate environment for the next few years.” Willet added that “we know the day is coming and have already made those adjustments.”

Cohen pointed out that “you have to operate in an environment where you have to assume higher interest rates. It is important to understand that you will be in a higher rate environment in three to five years from now. But we are still in a fairly attractive interest rate environment.”

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On the development side, activity in the sector remains strong despite increased competition, rising construction costs and decelerating rent growth, said Farb. CBRE Investors just raised their third apartment development fund and it was oversubscribed by more than $100 million, he said. He also pointed out that large public REITs such as Camden, Avalon Bay, BRE, Essex, Equity Residential, to name a few, are all developing and taking advantage of their ability to raise low cost debt in the secondary markets. So, with the abundance of new inventory coming online over the next few years, he asked panelists what impact it will have on the apartment sector.

Willet said that we probably won't sustain the demand. “There is some concern that there are pockets where we are going to get too aggressive,” he said. “And it isn't just two or three pockets, it is more…the suburbs are clearly the opportunity to play in—in terms of the momentum.”

According to Cohen, it is really just a wait and see situation. The rents that the new buildings are demanding, given how amenity rich new construction is, only time will tell if the market has the appetite to absorb those rent levels, he said.

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“If you give a developer money, he is going to build. If we are going to shut it down, we will have to through capital,” added Willet.

But there is still an attractiveness to the long term fundamentals that drive those flows, said Costello.

“There is a tremendous appetite for global capital to invest in the U.S. you are seeing interest in multifamily,” added Cohen. But he warned that “You have to be thoughtful in terms of demand factors, supply factors and the ability to get those rents. You have to do some very good underwriting. Sure there is always stupid money, but the smart folks are being very thoughtful and are really thinking about where the opportunities lay.”

When Farb pointed out that both real estate private equity funds and newly formed REITs are buying up single family homes in bulk to rent out based on the fact that the need for singlefamily rentals has increased after more than 5 million homeowners lost their homes since 2006, panelists didn't see worried that the trend would affect the apartment sector. “The person that wants a three- or four-bedroom home in the suburbs isn't the same person who wants a one- or two-bedroom apartment in the city,” explained Sharon Dworkin Bell, senior staff vice president at NAHB.

Fannie Mae and Freddie Mac have long been the life blood for the apartment industry, Farb pointed out, and there has been recent talk of eliminating or changing the way those entities operate, he said. When he asked panelists what changes, if any, do they foresee and what potential impact could it have on the multifamily sector, Costello said that “ripping off the Band-Aid, in terms of getting rid of them, would leave a big dislocation in the market.” He added that it would especially hurt the secondary and tertiary market. “But maybe the inaction would help the industry for a little while,” he added.

The final question of the panel referred to what panelists think is the most imminent economic threat to the apartment sector over the next 12 to 24 months, and panelists agree that it is both global uncertainty and Congress or the marriage of those two points—global uncertainty driven by congress.