Thursday, March 19, 2009

Vacancies in rental houses reach two-year high

Full report here: http://dola.colorado.gov/app_uploads/docs/2008-4%20-Single-Family%20Residential%20Survey%20-%20Public.pdf

Vacancies in for-rent condos, single-family homes, and other small properties across Metro Denver rose to 4.9 percent during 2008’s fourth quarter. According to a report released Thursday by the Colorado Department of Local Affairs’ Division of Housing, vacancies are at their highest level since the fourth quarter of 2006 when vacancies reached 5.5 percent.

Fourth quarter vacancies were up from a rate of 3.4 percent reported during the third quarter, and are up from 2007’s fourth quarter rate of 3.3 percent.

Fourth quarter rates are generally expected to increase from the third quarter to the fourth.

The smallest overall vacancy rates were found in Douglas County and the Boulder/Broomfield area with rates of 3.4 percent and 3.9 percent respectively. The highest vacancy rates were in Adams County which reported an overall rate of 7.4 percent.

All counties reported increases in the vacancy rate during the fourth quarter as compared to a year earlier, and all counties reported increases in vacancies from the third quarter to the fourth.

Vacancy rates for all counties surveyed were: Adams, 7.4 percent; Arapahoe, 4.1 percent; Boulder/Broomfield, 3.9 percent; Denver, 5.3 percent; Douglas, 3.4 percent; and Jefferson, 4.8 percent.

In general, a vacancy rate of 5 percent is considered the “equilibrium” rate, and vacancy rates below 3 percent indicate a tight market.

“During 2007 and the first half of 2008, we saw quite a few areas with vacancies down around 3 percent. But rates like that are pretty difficult to maintain under current economic conditions,” said Kathi Williams, Director of the Colorado Division of Housing. “However, single-family rentals continue to be strong relative to the overall rental market.”

According to the report, the metro-wide average rent increased to $995.24 during the fourth quarter, up from $966.01 during the same period a year earlier. Since the third quarter of 2008, rents fell slightly from $998.37.

Rents were highest in the Boulder/Broomfield area at $1453.82, and lowest in Denver County at $920.97. All counties except Adams County reported increases in average rents since the fourth quarter of 2007.

Average rents for all counties were: Adams, $1035.57; Arapahoe, $983.07; Boulder/Broomfield, $1453.82; Denver, $920.97; Douglas, $1409.29; and Jefferson, $982.57.

“The cost doing business as a property owner continues to increase,” said Gordon Von Stroh, a professor of Business at the University of Denver, and the report’s author. “Insurance, utilities, and property taxes are all still driving some rental increases.”

The Colorado Statewide Vacancy and Rent Study is released each quarter by the Colorado Division of Housing. The Report is available online at the Division of Housing web site: http://dola.colorado.gov/cdh
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.