The vacancy rate for Colorado apartments outside of the Denver area fell to 6.6 percent in the firsts quarter, a 22 percent drop from the 8.5 percent vacancy rate in the first quarter of 2009, according to a state report released today. Despite the dramatic drop in vacancies, rents aren’t skyrocketing – and in some cases are falling - because of still high unemployment and depressed wages, according to the report by the Department of Local Affairs’ Division of Housing.
The report shows the overall statewide decline in vacancies was driven by drops in Grand Junction, Colorado Springs and along the eastern plains. Fort Collins and Pueblo were the only metropolitan areas reporting higher vacancies, year over year. By contrast, many mountain areas reported vacancy rate increases , including Aspen, Durango, Eagle County, Glenwood Springs, Steamboat Springs and Summit County.
Vacancy rates in all metropolitan areas were Colorado Springs, 6.9 percent; Ft. Collins/Loveland, 4.9 percent; Grand Junction, 11.6 percent; Greeley, 6.9 percent; Pueblo, 12.6 percent. The metro Denver vacancy rate, measured in a separate survey, was 6.5 percent for the first quarter.
The first quarter’s statewide average rent fell from $844 during 2009’s first quarter to $840 during the first quarter of this year. Among metropolitan areas, average rents fell year over year in Fort Collins, Grand Junction and the metro Denver area, but were up in Colorado Springs, Greeley and Pueblo. Average rents rose year over year in several mountain areas including Aspen, Alamosa, Buena Vista, Eagle County, Glenwood Springs and Summit County.
Rents expected to inch up
“The statewide average rent fell slightly, but we see a lot of smaller markets with rising rents, and given the overall drop in vacancies over the last year, a slow movement upward for rents seems likely,” said Ryan McMaken, a spokesperson for the Division of Housing. “Fort Collins and Grand Junction are the only large markets where rents have fallen by more than a few dollars over the last year.”
The average rent in Fort Collins fell from $854 during the first quarter of last year to $837 during the first quarter of this year. In Grand Junction, where vacancies hit 13.3 percent during 2009’s fourth quarter, first quarter average rents fell from $680 to $663, year over year.
“The cost of operating rental units continues to increase, so there is upward pressure on rents driven by costs,” said Gordon Von Stroh, a professor of business at the University of Denver, and the report author. “But the employment and wage situation is putting downward pressure on rents, so we’re not seeing many big changes right now.”
One reason that the vacancy rate has dropped is because 60,000 to 65,000 students graduate each year from high school, and are looking to rent their first apartment, Von Stroh said.
Of course, the same dynamic was in place a year earlier, when the vacancy rate was much higher.
Fear factor not as great
“There’s been a fundamental shift in housing,” from the first three months of 2009, when the economy was in shambles, said Terrance Hunt, a broker with Apartment Realty Advisors. “A year ago, people were looking at alternative situations to try to save money. But a year is a long enough time to spend in mom’s and dad’s basement. Since there has been a shift in the economy, fewer people are doubling up to save money. The last downturn will go down as one of the worst in terms of fear.”
Average rents in all metropolitan areas measured were Colorado Springs, $709.99, Ft. Collins/Loveland, $837.99; Grand Junction, $663.47; Greeley, $660.86; Pueblo, $547.03. The metro Denver average rent, measured in a separate survey, was $877.16 for the first quarter.
The Vacancy and Rent Surveys are a service provided by the Colorado Division of Housing to renters and the multi-family housing industry on a quarterly basis. The Colorado Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type. The 29-page report is available online at the Division of Housing’s Web site.
Market area 1stQ 2009 1stQ 2010
Alamosa 12.9% 6.3%
Aspen 2.1% 2.7%
Buena Vista 9.5% 13.5%
Canon City 9.4% 5.6%
Colorado Springs 11.7% 6.9%
Durango 6.1% 7.1%
Eagle County 2.1% 6.0%
Fort Collins-Loveland 4.4% 4.9%
Fort Morgan-Brush 6.9% 7.1%
Glenwood Springs 1.5% 3.2%
Grand Junction 4.0% 11.6%
Greeley 6.4% 6.9%
Gunnison 7.9% 7.3%
Lake County 8.0% 7.9%
Montrose 9.4% 6.6%
Pueblo 7.4% 12.6%
Salida 3.8% 4.3%
SE Colorado 3.5% 0.7%
Steamboat Springs 1.2% 6.0%
Sterling 6.7% 4.2%
Summit County 2.7% 4.9%
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