Getting your player ready...
It’s good to be a landlord, not only in Denver, but in most of Colorado.
A report released today by the Colorado Division of Housing, which tracked more than 20 markets in the state, found that the overall vacancy rate fell to 5.5 percent in the first quarter, down 16.6 percent from the 6.6 percent in the first quarter of 2010. (That includes the Denver metro vacancy rate, which also is at 5.5 percent.)
Steamboat saddled with high vacancies
The market would have done even better, except for two laggards – Steamboat Springs, which saw its vacancy rate rise 122.5 percent to 17.8 percent in the first quarter from 8.0 percent a year earlier and Buena Vista, which experienced a 36.6 percent rise, going to 17.9 percent from 13.1 percent.
“I think a lot of it is seasonality for Steamboat Springs,” said Ryan McMaken, spokesman for the housing division. “A lot of (renters) have already left Steamboat by the end of March,” he added. “And historically, Steamboat never seems to have a tight of a rental market as other ski resorts. Steamboat seems to be more volatile than the other ski areas and seems to bounce back later.”
He said a big part of that may be is because it does not draw as many Front Range skiers as some of the closer ski resorts.
He noted that Summit County, with only a 2.6 percent vacancy rate, had the lowest rate of any single market. (The Northeast submarket of Colorado Springs was even lower at 2.3 percent.) “Summit County is much more a year-round area, and not just a resort area,” McMaken noted.
Statewide market forces vary
Gordon Von Stroh, the University of Denver business professor who authorized the report, noted that different market forces will be at work in diverse communities across Colorado. “Summit County and Buena Vista are both very small markets,” and so are likely to experience big percentage swings, he said.
He noted that the Pueblo, which has seen a 41 percent drop in vacancy rates, is benefitting from military personnel who are seeking less expensive alternatives to Colorado Springs.
And the northern Colorado markets are benefitting from an economy that appears to have more job growth than the Denver area.
Rents grow incrementally
Rents are rising much more modestly than the vacancies are dropping.
The average monthly rent – led by $1,138 in Eagle County – rose to $880 from $840, statewide. The median rent rose to $829 from $804.
Von Stroh said that rising rents are in the cards, as vacancies continue to fall.
And there are common threads helping the Colorado rental markets, as well as the entire nation, said Terrance Hunt, a broker and principal of Apartment Realty Advisors.
Housing woes help apartments
“It’s no secret that there has been a shift in the housing market, with more people choosing to rent than to own,” Hunt said. “Rental properties, in Colorado and across the country, are benefitting from this shift to renting from owning.”
It’s also more difficult to qualify for a loan, even if for someone who wants to take advantage of mortgage rates still hovering near historic-lows, he noted.
At the same time, so few new apartment communities are being constructed that the supply is not growing fast enough to meet the demand.
“Any improvement in the labor and job market will help drive down apartment vacancies and drive up rents,” Hunt said. “But those aren’t the only factors.”
Even without much job growth, there are about 35,000 Denver-area high school graduates each year, many of whom will be seeking to rent their first apartments, he said.
