Despite the increases, "cap rates in the 8%-range remain veryattractive," says Jeff Algatt, M&M's regional manager. "We'reless flashy and less volatile than other East Coast markets, butfundamentals are stable; there's limited new construction andsteady demand. Low prices relative to other markets will continueto attract out-of-state investors." He tells GlobeSt.com that 65%of his firm's 2005 multifamily sales were to out-of-stateinvestors.

"The buyer universe is changing," he says. "It's normalizing,and today's buyers aren't looking for a huge run-up in a shorttime. They aren't flippers; they are more conservative, comfortablewith increasing income over a longer term."

The overall multifamily vacancy rate has not exceeded 4.6% norfallen below 3.4% in any quarter since 2003. Effective rents haverisen 3.3% over the past 12 months, and this follows an increase of1.9% the previous year. Algatt projects a 3.5%-increase this year,and adds, "there's something of a shift to class B and Cproperties, because single-family housing affordability iscompeting with class A rentals. If you're paying $3,000 a month,you can buy; but, if you're paying $875, that's not a mortgagepayment." With this year's anticipated increase, the area's overallmedian rent rate is projected at $955 a month.