Silicon Valley Apartments - is there an opportunity to invest?

Most Silicon Valley apartment owners are very happy these days - read: not motivated to sell - because their rents are stable or up and their vacancies are down. Why?

1. Banks have foreclosed on many home owners and this makes them new tenants.
2. Many young people who normally would be buying their first homes are still in the rental market because home financing is more difficult than before.
3. Apartment building financing over 4 units has always been based on the building's net cash flow (not on the owner's income). Therefore, most 5 unit building and above have required 40+% down payments which makes the investment properties very stable.
4. Low turn over in apartment building sales in Silicon Valley - so few buildings sold at the peak of prices a few years ago.

This is why we see so few apartment buildings on the market and especially so few good deals.

Ok - then where shall we invest?

1. duplex - fourplex market has had foreclosures and short sales because financing was loose and investors made uninformed decisions in the last 5 years.
2. Secondary markets to Silicon Valley: East Bay, Napa, Sonoma, Solano Counties - softness in the newer built single family homes has put pressure on rents in apartment buildings.
3. Non-performing note sales of buildings that were over-leveraged based on relationship lending. Many smaller banks lent on buildings outside of the traditional 5+ unit financing guidelines.

Where do you see opportunities in Silicon Valley apartment investments?