After two years of escalating apartment rents, relief is in sight for Valley renters, as rentals of single-family homes and failed condominium conversions flood the market.

The Valley’s average apartment rent hit a record high of $768 in the second quarter 2007, up from $693 two years ago, according to research firm RealData Inc.

But industry experts say the largest bump in rents has likely already happened.

“Rents have gotten too high, too fast,” said Pete TeKampe , a broker with Marcus & Millichap.

From the second quarter 2002 to the same period in 2004, rents inched up 0.15 percent, TeKampe said. During that same time from 2005 to 2007, rents jumped 10.8 percent. This year, growth is expected to slow to 2.5 or 3 percent, he said.

The slowdown is being caused, in part, by the increase in supply of rentals.

Of the more than 30,000 apartment units converted to condos in recent years, at least 7,000 are expected to come back on the rental market, he said. Meanwhile, slumping sales in the housing market have many sellers trying to rent out their places.

“The inventory of homes for rent today is at its highest level it’s ever been,” TeKampe said.

Many people would rather rent a house if they can afford it, said Debbie Norton, a rental owner and property manager with John Hall & Associates.

Still, finding tenants can be tough as homeowners compete with apartments, Norton said. The rents they’re able to command aren’t always enough to pay the mortgage. A house worth $225,000 with 10 percent down would have a mortgage payment of around $1,600, while leasing it out might only bring in $1,100, she said.

Affordability is also a major issue for the apartment market, TeKampe said. Rents in at least two-thirds of the Valley’s submarkets are at or above the limit of what a typical renter can afford, he said.

The result has been climbing vacancy rates and concessions from landlords.

The Valley’s vacancy rate was 10.9 percent in the second quarter, up from 7.5 percent at the same time last year. A healthy vacancy rate is typically from 5 to 7 percent, TeKampe said.

Also, 60 percent of landlords are offering concessions, up from 46 percent in the second quarter 2006.

One month of free rent on a 12-month lease is the most common concession offered, TeKampe said. Some of the most severe concessions are a $99 move-in and two months of free rent, he said.

The rent increase in recent years stemmed from rapidly climbing home prices, said Bob Kammrath, owner of research firm Kammrath & Associates.

In 2000, the gap between the median apartment rent and median home price was small, so peopled opted to buy homes, Kammrath said.

That gap is closing again as home prices drop and rents rise, but the outlook for landlords will remain positive, at least until home sales stabilize or rise, he said.