In its Q3 report about the region's multifamily market, SanFrancisco-based RealFacts shows an inventory of 183,002 units inproperties from 100 units to 1,222 units. Occupancy stood at 90%,which fell from 91.2% in Q3 2007. And three months ago, occupancywas 88.8%. Earlier in thequarter, local experts were optimistic that the corner hadbeen turned.

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Statistics from M/PF YieldStar in Carrollton, TX, show the281,700-unit inventory, which includes properties with less than100 units, are 89.6% filled, down 3.4% from the same period lastyear. Occupancy was pegged at 90% at the end of the lastquarter.

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But, it isn't falling occupancy that is worrying M/PF YieldStarvice president of research and analysis Greg Willett so much as itis what's coming on line. "The volume of new supply ahead is prettyscary," he says. "Projects totaling 11,418 units are underconstruction. The area will grow its inventory by 4% in the comingyear to two years."

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Although there were assumptions that foreclosed homeowners wouldflock to apartments, it hasn't happened as planned. Caroline S.Latham, CEO with RealFacts, points out that foreclosed homeownersoften will move in with family or friends. "If you're a youngcouple with a couple of kids and you lose your house, your firstchoice isn't going to be living in apartment 23J in a largecomplex," she explains. "You'll stay with somebody's mom, dad, or arelative until you can get back on your feet."

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A positive in Q3, however, seems to be a tapering of the shadowmarket rentals. Willett tells GlobeSt.com that renters are afraidto lease homes out of fear of foreclosure. The proof, he pointsout, was in the low positive absorption of 620 units. "It's nothingto be ecstatic about, but it's better than the huge move-outs we'vebeen seeing," he says.

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Latham believes more move-outs are occurring because operatorsare stealing tenants from competitors by luring them withconcessions like low move-in rates, waiving application fees andtaking smaller deposits. "Some of them are even agreeing to pay thedeposit for the utilities," she says.

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Neither Latham nor Willett see much change in the comingquarter. Willett says until jobs come back to the area andinventory is exhausted that he expects to see more of the samethroughout 2009.

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Latham, however, believes that a positive change could happenshortly after the presidential inauguration. "A lot depends on whowill be elected and what types of powers will be enforced and howthe bailout will proceed," she contends.

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