With the anticipation of further economic weakness, Pizzo saysthe overall picture could get worse before it gets better. Heexpects property-level growth to remain healthy at between 2.75%and 3.25%. However, he recommends that "investors take profits inthe group, particularly into any additional near-term positivemomentum created by further covering by short sellers, as webelieve a further slowdown will materialize in the second half of2008 and first half of 2009."

As the second quarter results came in, relates Pizzo, it becameclear that landlords are focusing on building and maintainingoccupancy to prepare themselves for a potential further downturn.Despite the declining homeownership rate--most recently at 67.8%--slow traffic, rising concessions and the continuing economicslowdown is putting extra pressure on landlords, who areincreasingly finding it difficult to increase rents. In fact, inits July survey of multifamily REIT property managers--which polled2,500 managers in the top 15 apartment markets in the country--BofAfound that rent and occupancy levels remained relatively flat.

Meanwhile, the gap between renting and owning, at 1.28x, sitsbelow the 10-year average of 1.32x. And since jobs are closelycorrelated to same-store net operating income, don't expect thosefigures to go up soon, either.