The housing crisis may have caused a drop in property values, credit to tighten and foreclosures to increase, but one residential sector remains unfazed through it all: multifamily rentals.

Richard Anderson, senior real estate analyst at BMO Capital Markets gives a simple explanation saying that people still need a place to live. He added that a bad homeowner can still be a very good renter.

Despite the growing housing alarm, occupancy rates for apartments have remained stable, averaging about 90% to 95%, at a minimum. On the other hand, homeownership has been falling ever since the housing bust. Last year, the Census Bureau said that homeownership rate dropped to 67.8% from a peak of 69.2% in 2004.

Many potential buyers continue to play the waiting game, seeing how low home prices can go. Others are just finding it tough to get a mortgage after the shake-up in the subprime market.

All these events have been favorable for landlords, but the effect on the rental market has only appeared lately.

Anderson said that many efforts have been concentrated on residential properties, which held back the stocks in 2007. He said that many nervous investors seem to have avoided all companies in the housing market, even those involved in rentals but now, things have changed. These investors are now trying to figure out how to profit from the residential market, and one way of accomplishing that is joining the rental business, said Anderson.

Haendel St. Juste, an analyst at Green Street Advisors said that there might be some good deals in REITs (Real Estate Investment Trust) today. He estimated that overall, apartment REITs are trading at an 18% discount to their net asset value on average while others offering even more.

However, some analysts are warning investors to wait before they buy. These people believe that a turnaround in the housing market will not happen within the next 18 months. Additionally, there are growing concerns regarding about the employment market this year.

The Labor Department estimated that the nation lost 63,000 jobs in February alone.

Still, the biggest competition for rentals will come from unsold single-family homes and condo units, especially in foreclosure epicenters like South Florida, Phoenix and Las Vegas. Landlords will control the prices in those areas.

According to Real Capital Analytics, about 331,000 apartments were sold to condo converters during the condominium-conversion boom from 2004 through 2006, but since then, 31,500 units have returned back to rentals.

Anderson agreed that the current state of the national economy will create a lot of uncertainty in every market. However, he was still upbeat about the potential of apartment REITs. He said that so far, REITs are showing a good balance of negatives and positives.

This includes a more manageable number of new developments coming on line, which Anderson estimates at around 1% of existing supply, down from 2% a few years ago.

Last week, the Commerce Department reported that housing starts in February dropped by 0.6% from the previous month and 28% from the same period a year ago.

Additionally, Anderson said that plenty of financing help is available in REITs compared to other commercial property sectors, particularly from Fannie Mae and Freddie Mac, the government-sponsored mortgage enterprises.