Wednesday, July 24, 2013

Metro Denver apartment vacancies down to 13-year low

The apartment vacancy rate in the Denver metro area fell to 4.2 percent during the second quarter of 2013, dropping to the lowest vacancy rate recorded in any quarter since the third quarter of the year 2000. According to a report released Wednesday by the Apartment Association of Metro Denver and the Colorado Division of Housing, the metro Denver apartment vacancy rate was down from 2012’s second-quarter rate of 4.8 percent, and was also down from 2013’s first quarter rate of 4.6 percent.  

For the past fifteen quarters, the vacancy rate has fallen when compared to the same quarter one year earlier. The last time the quarterly vacancy rate rose year over year was during the third quarter of 2009.
From the second quarter of 2012 to the same period of 2013, the vacancy rate dropped in Adams, Arapahoe, Denver, Douglas, and Jefferson counties. During the same period, the vacancy rate rose in the Boulder/Broomfield area, but remained very low at 3.8 percent in that region during the second quarter of this year.  

“In spite of very low mortgage rates for home buyers, renting apartments remains a very attractive option for many households,” said Ryan McMaken, an economist with the Colorado Division of Housing. “The demand for real estate in the metro area remains solid as well due to a stable employment situation and demographics that point toward continued population growth.”

As vacancy rates moved down, the area’s average rent increased. During the second quarter of 2013, the average rent in metro Denver rose to $1,022, increasing 4.3 percent, or 43 dollars, from 2012’s second-quarter average rent of $979.

When adjusted for inflation, however, the average rent has not yet returned to the all-time high reached during the third quarter of 2001. Following the dot-com bust, inflation-adjusted rents fell from late 2001 through 2007.

“The good news for renters is there are an estimated 15,000 new units in the pipeline,” said Mark Williams, Executive Vice President for the Apartment Association of Metro Denver. “These new units mean new competition which will keep rental rates in check.”

The average rent rose in all counties measured, with the largest increases found in Douglas County and the Boulder/Broomfield area where the average rents grew year over year by 9.8 percent and 9.4 percent, respectively.  The county areas with the highest average rents were Douglas County and the Boulder/Broomfield area where the average rents were $1,1242 and $1,194, respectively. Adams County reported the lowest average rent at $933.

“The four percent increase in average rent is reflective of Denver’s robust employment growth, influx of new businesses, and overall great lifestyle,” said Heather Campbell, Vice President of Mill Creek Residential. “In short, people want to live, work and play here. And, with several new projects under construction, we believe that Denver will continue to deliver more rental opportunities at a variety of price points to meet the growing rental demand, further solidifying the city’s growth prospects.”  

2013’s second-quarter vacancy rates by county were Adams, 3.8 percent; Arapahoe, 4.5 percent; Boulder/Broomfield, 3.8 percent; Denver, 4.6 percent; Douglas, 2.9 percent; Jefferson, 3.7 percent.

Average rents for all counties were: Adams, $933; Arapahoe, $979; Boulder/Broomfield, $1194; Denver, $1025; Douglas, $1242; and Jefferson, $1003.