The big concern for panelist Sheila Miller, VP for multifamily and 55-plus housing at NAHB, is the lack of affordability. “An average one-bedroom unit could be 50% of an individual's income and that isn't sustainable,” she said.

Adler added that in most urban markets, there is a huge spread because the new product coming in is very expensive. “There is a great opportunity to redevelop properties and make them competitive,” he said. “Affordability pressures and social pressures are the black swans that are building behind the scenes.”

Panelist Greg Willett, chief economist at RealPage, added that this cycle has gone on long enough and has been strong enough that the really attractive and obvious deals have been done already.

Conor Wagner, analyst at Green Street Advisors, pointed out that the new supply that is coming on line has actually been helpful for affordability, despite what some think. But he said it takes a while to see the results trickle down. “To a certain extent, we will always be fighting that.”

Like Wagner, Skylar Olsen, senior economist at Zillow, said that new supply—even when it comes on the luxury end—has an impact on the lower end. She also pointed out that mortgages today are very affordable. But she added that the homebuying markets are inventory constrained and, due to the down payment, it keeps a lot of people in the rental market.

Adler has no doubt that the new supply coming onboard will get absorbed. “I don't think there is any kind of distress that is happening,” he said. “If I was putting my own money to work, I would try to do a value-add deal, but we still are left with the fact that there are people who used to live there who can't afford to live there now. There aren't many of those types of units being added so those people have to move further away from where the economic growth is happening.” That, he added, is “building up tensions and collateral damage around our mutual success.”

When moderator Eric Paulsen, SVP of Ten-X LLC, asked about single-family rental shadow inventory and if it has an impact on apartments, Adler said there aren't many three-bedroom units in the apartment stock. Period. “It is complementary, not competitive,” he said. “Most apartments are going to be one and two bedrooms and most single-family rentals are not owned by institutions… I think it will be good for the industry because it is a relief valve.”

Wagner added that it is about a lifestyle decision first and then a financial decision second. “In the housing bubble, you saw 25- to 34-year-olds jump into home ownership… They got crushed in it and now their ownership rate is the lowest we have ever seen. Maybe they will buy at 37 versus 32 and when they do, they won't have destroyed credit.”

When Paulsen asked where the sweet spot is if you plan to buy or develop an apartment building, panelist Adler said that you should look to places that have a strong sustainable demand for an extended period of time. He mentioned places like Tacoma, northern parts of Dallas and the Inland Empire as examples. Sacramento, he said, also looks good. “There has been no supply added, you are getting spillover from San Francisco and you are getting organic job growth.”

Willett would put his money in the urban core because he said that the barriers to entry are in the suburbs. “Urban core is growing about 5% annually, but suburban is about 2%,” he said.