Monday, November 21, 2011

Vacancies in rental houses rise as inventory grows

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Vacancies in for-rent condos, single-family homes, and other small properties across metro Denver rose slightly during the third quarter although the market remained tight with a rate of 3.4 percent. According to a report released Monday by the Colorado Division of Housing, the metro-wide vacancy rate during the third quarter of this year was up from 2010’s third-quarter rate of 2.9 percent, and the vacancy rate was also up from this year’s second-quarter rate of 2.6 percent.

The vacancy rate varied among different types of properties, although only triplexes and fourplexes reported vacancy rates above 4 percent. The vacancy rate in detached houses was 2.6 percent, and it was 3.3 percent in rental townhouses. Rental condominiums reported a vacancy rate of 3.8 percent.

At the county level, the lowest vacancy rates were found in Douglas County and in the Boulder/Broomfield area. The vacancy rate was 1.6 percent in Douglas County, and was 1.9 percent in Boulder/Broomfield.

The highest county-wide vacancy rate, found in Adams County, was 5.2 percent.

Vacancy rates for all counties surveyed were: Adams, 5.2 percent; Arapahoe, 3.1 percent; Boulder/Broomfield, 1.9 percent; Denver, 3.0 percent; Douglas, 1.6 percent; and Jefferson, 4.1 percent.

“The small increase in vacancies reflects the fact that we’re continuing to see new inventory come onto the market,” said Susan Melton, owner of Assured Management in Lakewood. “We’re still being approached by homeowners who can’t sell their homes, but don’t want to manage rentals themselves, and we also have established investor clients who are adding to the inventory of rental homes they already own. The net effect has been a slowly expanding inventory which can produce some new vacancies while also preventing rent levels from taking off the way they have in some apartment properties.”

The average rent in metro Denver for single-family and similar properties rose to $1,049 during 2011’s third quarter, rising 0.5 percent from 2010’s third-quarter average rent of $1,041. The third quarter’s average rent was down from this year’s second-quarter average rent of $1,063. Average rents are not adjusted for inflation.

“Year over year, these properties have experienced an increase in the average rent for 21 of the last 22 quarters,” said Ron Throupe, Assistant Professor of business at the University of Denver and the report’s author. “However, most of those annual increases over the past three years have ranged from two to three percent. So, generally speaking, the rent growth is there, but it’s been relatively mild.

Growth in the average rent was strongest in Jefferson County where the average rent grew 3.05 percent from 2010’s third quarter to the same period this year. The average rent fell the most in Adams County where it fell 2.5 percent, year over year.

Average rents for all counties were: Adams, $1,093; Arapahoe, $1,007; Boulder/Broomfield, $1,601; Denver, $973; Douglas, $1,399; and Jefferson, $1,011.

The average number of days on the market for single-family rentals and similar properties fell from 36.0 days during the third quarter of 2010 to 24.5 days during the third quarter of 2011. The number of days on the market rose from 2011’s second-quarter average of 15.7 days.