More total apartment units are under construction and coming on line here than there have been in several years, some Inland Northwest apartment market observers here say.

Some investors and developers are betting the number of renters will continue to grow, and that apartments will provide better returns than stocks and bonds.

Four of the seven highest-valued construction projects in Spokane County last year were new apartment complexes, according to building department data. The cities of Spokane and Spokane Valley, issued building permits for apartment projects valued at a combined total of $97.6 million, the highest value in five years.

On top of that, out-of-state investors recently have bought two large apartment complexes in the Spokane and Coeur d'Alene area for a combined $47.8 million.

In one of those transactions, Glenn Sather, who bills himself as "the apartment broker," with Coeur d'Alene-based Coldwell Banker Schneidmiller Realty, was involved in the $19.5 million sale of the 240-unit Rockwood Lodge apartment complex in Coeur d'Alene to a California private-equity group.

Sather says the apartment segment of the real estate market is acting differently than the rest of the commercial real estate sectors because several factors are coming together to stoke investor and developer enthusiasm in multifamily projects.

"Fewer people can buy houses, and fewer people are choosing to buy houses, so the tenant pool is expanding," he says. "Demographically, echo boomers are coming into the productive age, and that's also producing new households."

Historically low-interest financing, coupled with income expected to outperform stocks and bonds, is attracting investors to the multifamily market here, says Mitch Swenson, of Spokane-based commercial real estate brokerage NAI Black.

Swenson recently handled an $18 million transaction in which SAP-Spokane Project LLC, of Costa Mesa, Calif., bought the 270-unit Biltmore-Beaumont apartment complex at 2525 and 2727 E. 53rd.

"Even smaller transactions are getting favorable financing," he says. "Some credit unions are offering sub-5 percent financing."

Such real estate investing has come back into vogue, Swenson says.

"With stocks, you're hoping for appreciation," he says. "With real estate, you can get multiple benefits, including appreciation, cash flow, and debt reduction."

For those reasons, some individual retirement investors are even getting into the market, he says.

"Now you can invest an IRA in real estate, which wasn't the case years ago," Swenson says.

He expects investors and apartment developers will continue to propose new projects, because there are more prospective buyers of apartment complexes than sellers.

"We don't have many good products to sell, because people who are holding onto them are doing well," Swenson says. "I'm hoping to see some mid-range projects come available and be traded."

Projects under construction in Spokane County include:

•Palouse Family Apartments, a $20.2 million, 232-unit project on the South Hill, at 3210 E. 44th.

•Traditions at South Hill, a $14.1 million, 150-unit project at 3304 E. 44th, next to the Palouse Family Apartments.

•Traditions at Mill Road, a $12 million, 150-unit project in the Wandermere area at 12719 N. Mill.

•The second phase of Eagle Pointe Apartments, valued at $12 million, at 1090 Betz Road, in Cheney.

•The $22.3 million, 120-unit 55th Avenue apartments project, at 3223 E.. 55th, on the Moran Prairie.

Inland Washington LLC, of Spokane Valley, is developing Palouse Family Apartments and both Traditions projects; Lanzce Douglass, of Spokane, is developing the Eagle Pointe project; and Whitewater Creek Inc., of Hayden, is developing the 55th Avenue project with Spokane Housing Ventures.

Major apartment projects that started renting last year include a $28.6 million, 256-unit complex near Shelley Lake, in Spokane Valley, and the $25.7 million, 256-unit Pine Springs Farm complex just south of Spokane Valley, at 3711 S. State Route 27.

Spokane developer Harlan Douglass developed the Shelley Lake project, and Scottsdale, Ariz.-based The Wolff Co. developed the Pine Springs Farm project.

Meantime, vacancies have remained stable—so far.

As of Sept. 15, the vacancy rate for apartment complexes in Spokane County was 5.7 percent, down from 6.5 percent a year earlier, according to a quarterly survey conducted by the Washington Center for Real Estate Research, at Washington State University.

That's the lowest vacancy rate since 2008, when the September vacancy rate was 3.8 percent.

Rents edged upwards in 2011, the fall survey says. Monthly rent for apartments in Spokane County averaged $689 in fall 2011, up from $663 a year earlier.

Glenn Crellin, former director of the WCRER, says apartment vacancy rates likely will climb as new projects come on line.

"We'll see some investments for a while," says Crellin, who recently took a position at the University of Washington and transferred the real estate research operations there. "It doesn't take much to flip to the overbuilt status in smaller communities."

Crellin says developers are comfortable with vacancy rates around 5 percent.

"Once vacancy rates get to 7.5 to 8 percent, they say it's looking overbuilt to them," he says.

The apartment market likely will feel some competition from single-family rental homes, Crellin says.

"As some owners are having difficulty selling, they would rather rent than sell at distressed prices," he says.

Coldwell Banker Schneidmiller's Sather says nationwide apartment-vacancy rates are predicted to remain stable until at least 2015.

"There's a lot of pent-up demand from a lot of people who are choosing to rent," he says. "That puts upward pressure on rent and downward pressure on vacancy."

That's also drawing attention from institutional investors who are looking at multifamily housing investments in secondary, tertiary, and even fourth-tier markets, he says.

Even though it appears that a lot of new apartment units are in the pipeline, Spokane and Kootenai counties are just now playing catch-up, he says.

Kootenai County, for instance, had 200 new units come on the market in 2011, and that's just 0.3 percent of the total apartment stock, he says.