The apartment market in King and Snohomish counties appears to be rebounding, according to a report from Tom Cain of Apartment Insights, but it's unclear whether it will be enough to help owners whose loans are coming due.

Vacancy rates are down slightly. Rent incentives are decreasing, too, but rents continued to fall but only marginally.

This small drop in rents, together with an improvement in the vacancy and concession rates, indicates that rents are stabilizing after a year and a half decline, said Cain, whose company tracks buildings with 50 or more units.

The vacancy rate for conventional properties dropped to 6.4 percent in the first quarter, down from 6.8 percent at the end of last year.

Measuring all properties, including those in lease-up, gives a broader picture. During the first quarter, 790 units were added to the market, yet the gross vacancy rate fell from a peak of 9.1 percent to nearly 8.5 percent.

SeaTac remains the weakest submarket, though the vacancy rate dropped from 10.4 percent to 9 percent. Renton is the only other submarket with a vacancy rate over 8 percent. The lowest vacancy rate, 4.1 percent, is in Seattle between the ship canal and North 85th Street.

Cain said the lack of new construction in Snohomish County helped it outperform King County. Its vacancy rate is 6 percent compared to nearly 6.5 percent in King.

Rent incentives declined from $102 to $96 per month. This is the first drop since the third quarter of 2008.

It was also in the third quarter of 2008 when monthly rents peaked at $1,076. The first quarter's average rents of $1,015 per unit and $1.20 per square foot shows. This is a $2 decline from the fourth quarter. The submarket with the biggest rent decrease was Kirkland, though it still continues to have the highest average rents in the region at $1,404 per month. The Des Moines and Seattle Central, South submarkets were among those showing the largest rent increases.

Seven hundred-ninety units opened during the first quarter. That's a steep decline from the fourth quarter's record-breaking level which capped 2009, when 5,931 units opened. For the rest of 2010, Apartment Insights projects that 2,762 units to be completed. Of these, 2,077 units will open in the second quarter. The majority of new units opening in 2010 are in Seattle, followed by the Eastside and Renton.

There are 635 units under construction that will be finished in 2011, all of which are in South Seattle. There are only 373 units slated to begin construction in 2011 for completion in 2012.

There are 2,981 units in various stages of planning. This number has been fairly consistent during the last three quarters, Cain said. Nearly 80 percent of planned units are in Seattle. The volume of units in the planning stage peaked in the fourth quarter of 2008 at 11,616 units.

“This quarter's positive statistics indicate that the market has turned the corner,” Cain said in a prepared statement. Population growth of 32,800 people helped. A projected 1 percent employment growth should help ensure an improvement despite the nearly 2,800 units that will open in 2010.

“A major plus for the rental market near term is that the 635 units that will be completed in 2011 are the fewest for any year in decades,” said Cain, though the market remains challenging. Cain thinks it will take “considerable time” for rents to return to their previous highs.

On the investment side, values are down and financing is restrictive. “This is an especially difficult time for owners who bought when values were high and have loans that are coming due.”

There have been two sales in the first quarter. The Cove, a 312-unit in Federal Way, sold for $23 million to Weidner Investment Services. Equity Residential purchased the 157-unit Rianna in Seattle for $33.47 million.