WASHINGTON, DC-Delta Associates has reported what many in the industry here had suspected was on the horizon: multifamily rents in the metro area are expected to decrease as much as 2% this year. In 2014, rents will fall even further. Last month Paul Norman and Jorge Rosa from Cushman & Wakefield's Multifamily Advisory Group told GlobeSt.com that they had started to see a pullback in rent growth.

The question now for the market is not so much how much rents will decline (although that certainly is a consideration) but will the robust financing available for acquisitions and development start to pull back in response? The answer to this question is complex and dependent on far more than just rental trends, although a slowdown is not going to help. Unfortunately the ingredients are in place for some kind of pullback if current trends continue.

The GSEs are scaling back their support for multifamily finance. Although the market hasn't seen that much of an impact from that, Norman and Rosa point to a slight increase in interest rates over the past six months as cause for concern. "That has had an impact on some underwriting standards for investors," Norman says.

A bigger concern is the supply in the pipeline and this is where the slowdown in rent growth might become a sore spot. In short, there are 27,000 units anticipated to deliver in the next two years, according to Norman and Rosa, or five times the normal supply for the area.

Much of this has been financed or is being financed by equity – but there are signs that this piece of the capital market is becoming more conservative about DC.

"On the development side we are seeing equity providers require more than just a stand alone multifamily deal," Norman says. "Those are becoming more difficult to start." Instead, he says, equity is showing a preference for "well-located transit projects with retail amenities," he says.

On the positive side, the duo say, the DC area's fundamentals are strong – but it will be twisting in the wind a little in the short run until the impact of sequestration becomes clearer.