Wednesday, February 27, 2013

Renters compete for rental houses as vacancies disappear

Vacancies in for-rent townhouses, single-family homes, and other small properties across metro Denver fell during the fourth quarter of 2012, dropping year over year to 1.7 percent. According to a report released Wednesday by the Colorado Division of Housing, the metro-wide vacancy rate during the fourth quarter of 2012 was down from 2011’s fourth-quarter rate of 2.1 percent, and it was down from 2012’s third-quarter rate of 2.3 percent.

At the county level, the lowest vacancy rates were found in Jefferson County and in Douglas County where the vacancy rates were 1.3 percent and 1.2 percent, respectively.  

Vacancy rates for all counties surveyed were: Adams, 2.7 percent; Arapahoe, 1.7 percent; Boulder/Broomfield, 5.9 percent, Denver, 1.9 percent; Douglas, 1.2 percent; and Jefferson, 1.3 percent.

“When a rental house becomes vacant, we’re quickly getting multiple offers from people who want to rent the house,” said Robert Alldredge, owner of Jericho Properties Realty in Lakewood. “The market is as tight as I can remember, and I’ve been doing this for thirty years.”  

In spite of historically low vacancy rates, growth in the average rent for rental houses, townhomes and other small properties have been modest during recent quarters. The average rent in metro Denver for single-family rentals and similar properties rose to $1,083 during 2012’s fourth quarter, rising 1.9 percent from 2011’s fourth-quarter average rent of $1,062. The fourth quarter’s average rent in 2012 was down from the third quarter’s average rent of $1,090. Average rents are not adjusted for inflation.

“The low growth rate in the average rent is deceptive, and is kept down by the fact that many owners are still afraid to push rents to the point that the renter leaves,” said Lyle Haas of Colorado Realty and Property Management. “Many owners could push rents more than they are, and I’m surprised at how high our renewal rate is right now, even when we’re asking for some big rent increases.”

The average number of days on the market remained low during the fourth quarter of 2012, at 34 days. From 2006 through 2008, rental homes and townhomes were often on the market from 40 to 60 days, but a tight inventory of rental homes in recent quarters has kept turnover time low.

“Rising home prices have lead some rental-home owners to sell their properties,” said Marc Cunningham, President of Grace Property Management. “Many of those homes will become owner-occupied, and the number of our clients who want to sell looks like it will double this year.”