Thursday, August 9, 2012

Colorado apartment vacancy rate falls to 4.9 percent as rents rise in all metros

The vacancy rate in Colorado apartments was down during the second quarter of 2012, falling year over year in all metro areas including Colorado Springs, Denver metro, Ft. Collins, Grand Junction, Greeley and Pueblo. According to a report released Thursday by the Colorado Division of Housing, the combined vacancy rate for apartments in 6 metro areas across Colorado was 4.9 percent during the second quarter. The rate was down from 2011’s second quarter rate of 5.2 percent. The combined vacancy rate fell to the lowest vacancy rate recorded since the first quarter of 2001 when the statewide vacancy rate was 4.3 percent. 

Increases in demand for rentals broadened to all metros of Colorado during the second quarter with vacancy rates in all metros dropping to 6 percent or below. The lowest metro-wide vacancy rate of 3.5 percent was found in the Ft. Collins/Loveland area and the highest was a rate of 6.0 percent in Colorado Springs. A vacancy rate below 5 percent indicates a tight market. 

The metro Denver vacancy rate during 2012’s second quarter, released last month in a separate survey, was flat year over year at 4.8 percent.

Although employment typically is a major driver in demand for rental housing, even areas with unemployment rates above 9 percent, such as Grand Junction and Colorado Springs, saw vacancy rates fall during the second quarter. 

“In spite of some relatively weak job growth in some metros, household formation continues in Colorado, and people are looking to rent apartments,” said Ron Throupe, a professor of real estate at the University of Denver’s Burns School of Real Estate and Construction Management, and the report’s author. “In those areas with the most job growth, like Larimer county, the apartment market has become very tight.” 

With the exception of the Ft. Collins/Loveland area, the vacancy rate also fell in all metros from the first quarter to the second quarter of this year. Seasonal factors often push vacancies down from the first quarter to the second quarter, however. 

Vacancy rates in all metropolitan areas were: Colorado Springs, 6.0 percent; Ft. Collins/Loveland, 3.5 percent; Grand Junction, 5.5 percent; Greeley, 5.4 percent; Pueblo, 4.3 percent. 

The statewide average rent in Colorado increased 7.4 percent from 2011’s second quarter to 2012’s second quarter, rising from $877 to an all-time high of $942. Across the state growth in average rents varied considerably, although all metros reported year-over-year increases. The average rent in the Colorado Springs area, for example, increased 1.8 percent, year over year, while the average rent in the Ft. Collins/Loveland area rose 12.8 percent. 

The largest increase in the average rent was found in the Pueblo area where it rose 17.5 percent from the second quarter of 2011 to 2012’s second quarter, following four quarters of year over year declines.

“We’re now seeing signs of the kind of general rent growth across all metros that we haven’t seen since 2008,” said Ryan McMaken spokesman with the Colorado Division of Housing. “Limited supply is an issue. New units are on the way, but there’s a lag on that, and some metros aren’t seeing much new construction at all.”

Average rents in all metropolitan areas measured were Colorado Springs; $776, Ft. Collins/Loveland, $996; Grand Junction, $674; Greeley, $662; Pueblo, $602.

The metro Denver average rent, measured in a separate survey, was $952 during the second quarter.