Thursday, July 26, 2012

Slideshow: Colorado Springs vacancies and rents

The Division of Housing today released its vacancy and rent survey for the Colorado Springs metro area. The market continued to show signs of mild tightening in vacancy with some ongoing rent growth. Apartment demand is being somewhat lessened by a weak job market in the region.  Nevertheless, the overall trend is toward a tighter market. The following slide show looks at some recent trends in the apartment market in the region.

As reported today, the apartment vacancy rate in the Colorado Springs area during the second quarter was down to 6.0 percent during the second quarter, falling from 6.4 percent durign teh second quarter of last year and 6.4 percent during the first quarter of this year. the first graph shows that the metro-wide vacancy rate is now at a ten-year low, dropping off from the past decade elevated vacancy rates. The region has not yet returned to the vacancy rates seen before the 2002 dot-com bust however.

The second graph shows the vacancy rates by submarket within the region. The overall trend is downward in vacancies, and we can see that one of the biggest factors in keeping the metro-wide vacancy rate as high we it was through 2007 and 2008 were the very high vacancy rates seen in the Southeast region and the Security/Widefield/Fountain area. We're now starting to see vacancies really fall off in those two submarket, likely being driven by a flight to affordability in apartments.

The third graph shows the overall average and median rents in the Colorado Springs area.  Rent growth was very strong and sustained through 2011, but has moderated in 2012. The growth during the second quarter was 2.3 percent compared to the second quarter of last year.Rents have increased considerably since 2008 in Colorado Springs.

The fourth graph shows the percentage change in the averag rent for the Colorado Springs area. The second quarter's growth of 2.3 percent is a rather moderate rate, and shows some slowing over the past two quarters.  Nevertheless, there has been year over year growth for the past ten quarters which is the most sustained growth we've seen since 2001.

The fifth graph shows average rents broken out by market area. The high-rent areas are the Northwest and Far Northeast areas while the low-rent areas are Southeast, Central, and the Security/Widefield/Fountain areas. The Central region has seen some of the strongest growth in recent years while the Security/Widefield/Fountain area has been largely flat in its rents. Recent declines in vacancies in southern areas of the Colorado Springs are may drive more growth in the future.

The final graph shows economic vacancy and rental losses for the Colorado Springs area. The economic vacancy is physical vacancy plus rental losses. We can see that the trend here is clearly downward. These stats have only been kept since 2003, but it is likely that we're now seeing a return to levels in rental losses and economic vacancy not seen since 2001. The fact that losses fell to an all-time low during the first quarter of 2012 suggest strength in demand for apartments that does not show up in the basic market rent information.