From the WSJ:
When the music stopped in the residential-real-estate market, speculators who got caught with unsold houses and condos began putting them on the market as rentals. This "shadow market" has made investors jittery about price-destroying competition for the real-estate investment trusts that own big apartment complexes.
For most of the country, though, it is a landlords' market, with vacancy rates falling and rents rising in many major cities. Despite a selloff in apartment REITs, the shadow market is really confined to real-estate disaster areas such as Florida, Las Vegas and Phoenix. That presents a buying opportunity for stock-market investors.
Be careful following this advice outside of the short term. Any significant amount of single family housing purchased at bubble peak prices cannot compete with apartment housing due to economies of scale, the significant management expense of dealing with actual separate physical properties, and most importantly, the negative cap rate that would entail due to acquisition costs. Single family homes are not significant threats, unless entire communities are actually rented out, which is unlikely. What will dent the low vacancy rate is the rampant condo build-out, much of which I feel will fall back as rentals. They will be highly unprofitable rentals since the developers (hence the bank) probably paid too much for the dirt underneath. Alas, better some money than no money at all. Much of the stuff will not be able to sell at anywhere near break-even. Since most construction mortgages have a rental fall back clause of some sort or fashion, I am sure this will, and has been used to a much greater extent due to the glut of condo building in the coastal areas and speculative spots such as Vegas.