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Apartment vacancy rate falls to 4.2%

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Highlights:

  • Colorado Division of Housing releases 2Q apartment report.
  • Rental market booming despite low mortgage rates.
  • Apartment vacancies lowest since 3Q 2000

The apartment vacancy rate in the Denver metro area fell to 4.2 percent during the second quarter, dropping to the lowest vacancy rate recorded in any quarter since the third quarter of the year 2000, according to a report released Wednesday by the Apartment Association of Metro Denver and the Colorado Division of Housing.

The metro Denver apartment vacancy rate was down from 2012’s second-quarter rate of 4.8 percent, and was also down from the first quarter rate of 4.6 percent.

For the past 15 quarters, the vacancy rate has fallen when compared to the same quarter one year earlier. The last time the quarterly vacancy rate rose year over year was during the third quarter of 2009.

From the second quarter of 2012 to the same period of 2013, the vacancy rate dropped in Adams, Arapahoe, Denver, Douglas, and Jefferson counties.

During the same period, the vacancy rate rose in the Boulder/Broomfield area, but remained very low at 3.8 percent in that region during the second quarter of this year.

Apartment demand strong despite low mortgage rates

“In spite of very low mortgage rates for home buyers, renting apartments remains a very attractive option for many households,” said Ryan McMaken, and economist with the Colorado Division of Housing.

“The demand for real estate in the metro area remains solid as well due to a stable employment situation and demographics that point toward continued population growth.”

As vacancy rates moved down, the area’s average rent increased. During the second quarter of 2013, the average rent in metro Denver rose to $1,022, increasing 4.3 percent, or 43 dollars, from 2012’s second-quarter average rent of $979.

When adjusted for inflation, however, the average rent has not yet returned to the all-time high reached during the third quarter of 2001. Following the dot-com bust, inflation-adjusted rents fell from late 2001 through 2007.

“The good news for renters is there are an estimated 15,000 new units in the pipeline,” said Mark Williams, Executive Vice President for the Apartment Association of Metro Denver. “These new units mean new competition which will keep rental rates in check.”

The average rent rose in all counties measured, with the largest increases found in Douglas County and the Boulder/Broomfield area where the average rents grew year over year by 9.8 percent and 9.4 percent, respectively. The county areas with the highest average rents were Douglas County and the Boulder/Broomfield area where the average rents were $1,1242 and $1,194, respectively. Adams County reported the lowest average rent at $933.

Second-quarter vacancy rates by county were:

  • Adams, 3.8 percent.
  • Arapahoe, 4.5 percent;.
  • Boulder/Broomfield, 3.8 percent.
  • Denver, 4.6 percent.
  • Douglas, 2.9 percent.
  • Jefferson, 3.7 percent.

Average rents for all counties were:

  • Adams, $933. Arapahoe, $979.
  • Boulder/Broomfield, $1194;.
  • Denver, $1,025;.
  • Douglas, $1,242;.
  • Jefferson, $1,003.

Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal LendingLand Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.