At this point, researchers with third-quarter numbers sayoccupancies are still in good shape. Houston-based O'Connor &Associates' October report puts occupancy at 90.6% in the147,501-unit inventory. Marcus & Millichap Real EstateInvestment Services' report pegs occupancy at 92.6% whilejust-released statistics from M/PF YieldStar, based in Carrollton,TX, shows 94.2% occupancy for 161,800 units.

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Greg Willett, vice president for M/PF YieldStar, says he'sworried about what lies ahead. Deliveries are accelerating, hepoints out. There have been 4,837 units already delivered this yearand 13,366 units are under construction. Even with continued jobgrowth, he says excess inventory could reduce overall occupancy to91% in 2009. O'Connor & Associates shows 12,134 units arerising.

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Patton Jones, sales director for Apartment Realty Advisors inAustin, admits there is a lot of construction, but points out thereare two sides to the story. "Deals that were permitted and financedone year ago are currently under construction. That accounts forabout 14,000 conventional units added to the inventory over thenext to years," he tells GlobeSt.com. With financing drying up andconstruction loans all but impossible to get, once those units comeon line "then we drop off a cliff," he says. "Not much more iscoming after that."

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Steve Hollingsworth, associate in Austin for Marcus &Millichap, says that, in the short term, there could be a glut ofmultifamily product, particularly in the far north and far southareas where there aren't many barriers to entry. "We're overbuilt,"he says, "but in the long term, things will catch up."

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