MCLEAN, VA—The multifamily market can expect to see another banner year in 2014, according to two separate market reports. At the same time, though, signs of shifting fundamentals are becoming clear and making it slightly more difficult to predict such trends as cap rates and pricing.

The latest entity to give a nod of approval to the multifamily market's performance is Freddie Mac, which says in a new report that favorable conditions in the multifamily market will continue through the year but "with some moderation relative to 2013."

One issue has been demand, which as the industry well knows, has been sky high. The result, the report says, has been premium pricing for assets in top markets.

"It has not been unusual to see 4% cap rates in markets like Boston, New York City, San Francisco, San Jose and Washington DC," the report said.

Freddie Mac is estimating that a 1% growth in employment could lower cap rates by 20 to 30 basis points.

Freddie Mac believes that some of the risk of rising interest rates has been accounted for in prices, though; hence its prediction that the national cap rate for this asset class, currently at 6.4%, will stay below 7% for the next few years.

Of course, such calculations are part science and part art, as the GSE noted. "Because rising interest rates often go together with higher inflation including rent inflation—the impact to value is not clear. That is why supply conditions are so important. If supply exceeds demand, in a given market, that puts downward pressure on property cash flows and values. So in this period of rising rates, it is especially important that supply stays in line with demand."

Supply and demand for multifamily, though, have been mismatched for several years, although a great deal of the former entered the pipeline in 2012 and 2013.

A new survey by Beech Street Capital, a Capital One company, shows that multihousing commercial real estate professionals are more than twice as likely to be net buyers than net sellers in 2014, with 46% planning to grow their portfolios this year. Meanwhile only 18% expect to reduce their holdings.

Rising interest rates were cited by 34% of respondents as their greatest concern in the coming year, compared to overbuilding of apartment units (24%), the pace of cap rate expansion (11%), access to financing (10%), and global uncertainty (10%).