The market is in flux.  One thing we know is that as a whole the economy and real estate in particular is on the declining end of the cycle: though, if you delve into the details some segments are probably on the bottom while others are in over correction, yet others are at the top end of the slide down: those in over-correction are probably the true buy opportunities because they are at levels below the current market and in many cases below replacement cost: often, you could tear the structure down and do well with just the land. 

It's difficult to say exactly where we are and where we are heading. The opinions, educated and not are varied and it's difficult to find someone to rely on.

I have found a few sources that I have decided for my own reasons rational and not to rely on, and most of the time those sources have been right (over the last decade or so), though my mistake was not acting on them.

By the looks of it we may have a deflationary environment for the coming years but it may be inflationary if the government pumps money into the economy: more likely we'll have flat growth.

The commercial market has started to decline at a later time then residential: luxury residential started later then starter homes and move up homes.  The decline in the markets and the self-feeding asset depreciation will continue until the signals saying otherwise are strong enough to start money moving again. 

How about multifamily homes?

"Apartment owners in C buildings will be the beneficiary of the DEFLATIONARY wave that has hit the U.S. economy and hurts anyone in debt. Decreasing asset and consumer prices benefits those on a fixed minimum wage as long as they hold no assets. Gasoline prices under $1.50 and declining food prices increases savings and the ability of these low income workers that live in C buildings. With financing available for multi-family properties from Fannie and Freddie these properties are the only ones that have a chance to see price appreciation in the next few years." (Early Warning Wire 12/24/08)

Makes sense to me but what about in an inflationary environment that some say we'll head into because the government will have to print more money to get marks moving and the fight the deadly deflation? 

Apartment owners in areas with a strong rental base will have tenants.  The key is to buy the property as a business not for appreciation but for cash flow and debt pay down: that's probably the only secure way to invest and there are properties, many of them, on the market that have cap rates up to 20.  

I'm not surprised there is an increased interest in small apartment buildings.  There are quite a few investors who I look up to that built up a decent portfolio of cash flow properties and choose to work, rather then being forced to work.

Also posted at: Arizona Apartment Investor