Financing for new apartment projects is almost impossible to find. Building materials costs continue to rise. And the shaky economy means that many of these buildings will open to uncertain demand. Yet, after dipping below 200,000 units in early 2007, apartment starts to date are now back above that magic number.

So what gives?

Right now, projects that were already in the pipeline are driving up starts, but that number will come down. At least that was the consensus reached by Ron Witten, founder of Witten Advisors, an apartment market advisory firm, and Dave Seiders, chief economist for the National Association of Home Builders, during Wednesday's NAHB Fall Construction Forecast.

"We don't think this is a sustained trend," Witten said.

The decline in starts will likely come soon. Witten predicts that by 2011, starts could fall to around 125,000 units—numbers not seen since 1993. "We're going to be in for a couple of years of deterioration in multifamily starts," Witten added.

At the core of this drop-off is financing. The amount of equity needed to completed apartment construction deals has risen significantly. During the boom, apartment developers could get by with 25 percent equity or less on deals. Now, lenders are asking for around 40 percent equity. And even with financing, apartment owners don't know what the economy will look like when the properties open in a year or two.

"A decision to start today exposes me to a lot of risk going forward," Witten said.

The reality is that, right now, anything that opens faces a lot of competition. There are more than 1 million excess housing units on the market. That's down from the 1.2 million on the market earlier in the year.

Whether these housing units are for-sale or rentals, apartment owners should be concerned (even though Witten did acknowledge single-family rentals were losing their appeal because of their distance from the urban core and rising commuting costs). "It's pretty fluid whether I'm renting or selling my home, depending on who knocks on the door," Witten said.

Come 2009, Witten doesn't see a lot of interest in this excess inventory. "We'll make very little progress in excess inventory in most of 2009," he said.

By 2010, however, Witten thinks much of the excess inventory will be burned off. With little new construction coming online, that bodes well in the long-term for apartment owners—provided job losses didn't cut too deep. "The fundamentals are relatively good in the apartment business," Witten said.