PHOENIX-After nearly 18 months of slow investment sales in the multifamily market, change could be just around the corner. Experts acknowledge this year and the first part of 2009 most likely will be write-offs, but increased activity could actually begin in mid-2009.

On the surface, numbers might be deceptive. According to Tyler Anderson, vice chairman in Phoenix for CB Richard Ellis, last year’s multifamily transactions stood at $3.5 billion. This year to date, the sales total is $400 million. But investors, especially private capital investors, are starting to be cautiously optimistic, not so much because Phoenix is becoming a market for fire-sale deals, but rather single-family sales are starting to come back to normal. And, multifamily transactions are likely to follow.

“I’m starting to see deals come to market and people talking about that more,” Anderson says. “While we probably won’t get back to that insane $3.5 billion in 2009, we’ll likely see around $1.5 billion.”

Investors are becoming more optimistic when they see properties’ financial statements. Anderson points out operating incomes are much better than they were even in 2003, at least among some of the larger operators.

“In half of the apartment properties we’ve been underwriting in August, the trailing three-month operating income is better than it was six, nine, even 12 months ago,” adds Brad Goff, principal with Apartment Realty Advisors in Phoenix. “It’s the first time that’s happened in more than a year.”

The difficulty is, the better operating figures haven’t filtered into the investor mindset yet. “People with boots on the ground here–the owners, managers and brokers–are seeing it,” Goff tells “Investors are still pretty cautious.” And he says they will stay cautious until they too can see the change in operating figures.

Anderson says his phone has been ringing of late with people looking for deals while Goff says players that haven’t been in the market since the mid-1990s are coming in and taking a good, long look at opportunities. Requests are coming from private capital rather than advisers and institutions, which are continuing to take a wait-and-see attitude. Both pros, though, say private capital buyers can act more quickly because they’re not beholden to a board of directors.

The deals, however, are difficult to find due to the continued gap between what the buyer is willing to pay and what the seller expects. John Thomas, acquisitions manager with BPG Properties Ltd.’s office in El Segundo, CA, says when it comes to assets, particularly those with more risk, buyers are unwilling or unable to meet seller’s prices, which aren’t high these days.

“Sellers of assets acquired during the pricing bubble are unwilling or unable to sell, because the loan is larger than the current value,” says Thomas, whose company invests in the Phoenix market. “In the short term, we’ll see foreclosures and short sales and over the longer term owners without much leverage more likely to transact.”

Much like Goff and Anderson, Thomas says there are plenty of buyers. “Just not at the bubble prices we saw,” he adds.

With single-family prices correcting, lenders being more prudent and cautiously interested buyers coming into the market, the brokers believe the long slow season will soon come to an end. “What people forget is that there’s a finite amount of supply here,” Anderson explains. “And the fundamentals are still there. They always have been. The reality is we’ve had a significant correction and I’m pretty optimistic as we go forward into 2009.”

Goff agrees, saying he’s convinced that the market has bottomed out across the board. “I think we’ll look back and see that August of 2008 was a turning point,” he adds.