Friday, September 28, 2012

Slideshow: Single-family and condo vacancies

Below is some additional analysis of data collected by the single-family/condo vacancy and rent survey released last month.

The first graph shows the metro-wide vacancy rate for single-family homes, condos and townhomes. The vacancy rate durign the second quarter of this year was 2.0 percent, which is very low.

In recent years, the vacancy rate in single-family homes tends to be lower than in multifamily units. The vacancy rate since 2009 has tended to come in between 5 percent and 9 percent while it has ranged from 2 percent to 6 percent in single-family units et al. The decline in single-family vacancies can be attributed at least partially to the rise of foreclosures and the decline of home sales. This phenomenon has driven many households into renting homes instead of owning.

The second graph shows that this trend in declining vacancies extends to condos and townhomes. Condo vacancies have tended to be higher and more volatile than that in houses and townhomes, but all three property types have nevertheless seen declines over the past ten years. 

 The third graph shows the nominal (not inflation-adjusted rent) as measured by the report.Rents have been largely flat at around $1,050 for the past several quarters. Growth was significant between 2005 and 2011, however. Property managers have noted that many owners are reluctant to raise rents more than 5 percent in order to avoid turnover, and overall demand for single-family rentals may be impacted by ongoing increases this year in existing home sales.

The fourth graph shows the average rent by property type. We can see that condos, by far, have the lowest average rent and that the average rent is actually down slightly from where it was in 2010. Condo rents are bringing down the overall metro-wide average rent in these properties.

If we adjust for inflation, we see that the average rent hasn't really gone up since 2006. The increases in nominal rents in recent years has been just enough to keep rents flat in real terms.Over the past ten years, the inflation-adjusted average rent for these properties in metro Denver has gone down from $919 (2nd Q 2003) to $800 (2nd Q this year.)