Integra Realty Resources of New York City puts Houston in third place. Carrollton, TX-based M/PF Research says it's one of five markets that will rebound quicker than others. And, it was the nation's only apartment market in "notably better shape" at the end of 2001 than it was at the beginning, according to M/PF Research.

Integra calculates the inventory at 487,000 units. With a 4.7% vacancy rate, that translates into 22,889 vacant units. Between 1998 through last year, Houston was absorbing 8,525 units annually. Absorption is predicted to fall to 5,767 units per year through 2004.

Scott Rando, operating manager of Cushman & Wakefield of Texas Inc.'s multifamily valuation and appraisal services national team, tells GlobeSt.com that there is a lot of momentum in the multifamily sector in Houston. Job growth is softer than prior years, but it's still above the national average and is ranked seventh in the nation. But rising interest rates could be a windfall for the multifamily sector as tenants hold back on home-buying plans.

No one would argue that Houston hasn't been a shining star. But, there is a downside, forewarns M/PF Research. The city just might not have reached the bottom of its economic slowdown, concludes Greg Willett, M/PF's director of research products. Historically, oil price shifts as occurred in 2001 don't register on barometers until a year has passed, he said. Add that to the corporate headaches of Enron, Compaq and Continental Airlines and it's too early to tell how deep the impact will run. Still, M/PF, like others in the industry, are betting that rent will grow, units will be absorbed and the market will remain bright.