The multifamily property investment market in many North Bay markets seems to be stabilizing and could strengthen further in the third quarter as owners further adjust rents and sale pricing to reflect major shifts in market behavior.

Though sales remain slow, particularly for entry-level two- to four-unit properties, multifamily property investment activity in Marin has picked up considerably from last year. The change has occurred particularly for properties priced at less than $1.5 million, reflecting pricing for some properties as of 2001, according to Katherine Higgins of Bradley Commercial.

“Sellers are now willing to take lower prices, and investors are willing to move into the market and buy,” she said.

Savvy investors with cash have been waiting for pricing to move lower on over-encumbered properties purchased in the past six years, she said.

For example, some buyers at the peak of the market in 2007 were financing at 6 percent to 7 percent interest rates on properties with a 5 percent capitalization rate, then rents may have slid 5 percent to 10 percent since then, according to NorCal Commercial President Scott Gerber.

Now, the situation in a number of property sizes and submarkets is reversing, and investors are starting to respond to prices that are almost 30 percent lower for 10-plus-unit Marin properties and 35 percent lower for such complexes in Sonoma County, he said.

“The smart money is aware of that,” Mr. Gerber said.

Though delayed in responding last year to worsening economic conditions, multifamily owners and managers last fall aggressively cut rents on vacant units and have been seeing a rebound in occupancy to around 96 percent in Sonoma and Marin counties as a result, according to Mr. Gerber.

That is prompting some tests of rent increases for empty units in Marin, which could spread to Sonoma County this fall, he noted.

That is part of an emerging Bay Area and national trend toward higher rents and occupancy rates in the next few years because of a growing pool of renters and lower number of new units compared, according to Jay Cross in Cornish & Carey Commercial’s San Rafael office, citing new data from MPF Research of Carrollton, Texas.

Trends seen nationally also being observed in markets with a high number of vacant single-family homes are keeping occupancy rates high even while unemployment rates also are high, he said. Multiple families who had been sharing a home are now looking to rent their own spaces, 20-somethings forced to live at home just out of college are getting help from parents to move out, and an increasing number of would-be or former homeowners who can’t qualify to buy.

“Institutional investors who are looking to buy Bay Area properties think rents will grow 8 percent to 9 percent by 2012-2013 because of a lack of new product, the time it takes to start and complete projects and occupancies in the Bay Area are very high even with job losses,” he said.