For example, the report shows rental rates rising in the Boulder/Broomfield market.

“But rents are not increasing, if you compare the same product over the same product,”  said Allredge, of Jericho Properties Realty in Lakewood. “The product is simply more expensive in those markets. It’s all about the mix. Rents are soft throughout the metro area.”

And yet, overall, he thinks that the worst may be over for the housing rental market.

“I would say I am cautiously bullish,” Allredge said. “I think we all agree from a landlord’s perspective, we are showing signs that we are heading in the right direction.”

Although the overall third-quarter vacancy rate for housing rentals rose to 4.6 percent from  atypically low 3.4 percent in the third quarter 2008, it is down from 5.2 percent in the second quarter.

“It’s still below 5 percent, which is considered good, and it is hard to imagine it can fall much below 3.4 percent, so it is not shocking it is up from a year ago,” said Ryan McMaken, spokesman of the Colorado Division of Housing, which released the report authored by University of Denver Business Professor Gordon Von Stroh.

Although vacancy rates typically drop from the second quarter to the third quarter for seasonal reasons, the overall trend of low vacancies is positive, Allredge said.

“The market is really pretty flat for rental rates,” Allredge said. “But I think there is reason for some optimism with some job formation and with unemployment dropping, Denver is a bit ahead of the curve compared to the rest of the country. We never became as overbuilt as other parts of the country did. The laws of supply and demand really do work, if you let them.”

Allredge also said that the so-called “shadow market,” seemed to have peaked last year and early this year. The shadow market, discussed in an earlier blog, is a hard-to-count inventory of homes. Part of the shadow market comes from people unable to sell their homes who are renting them, and some of it is owned by banks that have yet to put them on the market.

“That is the majority of our new product in our (rental) portfolio,” Allredge said. “We get very few properties bought by investors with the idea of immediately putting them into the rental pool. But I do think the shadow market had a bigger impact last year and the first part of this year. Foreclosures seem to be softening a bit.”

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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