Of the four major food groups of investment-grade, income-producing real estate (apartments, retail, industrial and office), apartments have been the poster child — with good reason. The sector experienced well below trend addition to supply for five years, and it has good demand drivers.

During the recent economic unpleasantness, the average number of persons per household increased significantly. That means a whole lot of people who are living together would rather not. As soon as the “rather nots” get a job, they will probably rent an apartment. Said another way, the baby boom echo is in its prime apartment renting years. And the return of the down payment to the single-family sector means fewer renters will be lured out of apartments via no-peeky loans.

The demand drivers are real, but they are not enduring. The demand will soon be satisfied. Every developer over two feet tall has decided that he or she is an apartment developer because no other