Tag Archives: vacancy rate

Colorado Springs Apartment Rents Continue Upward Trend

The Colorado Springs apartment market continues to show strong growth through the third quarter of 2013. Not only has the vacancy rate stayed at its 12-year low of 5.4% (down from 6.1% a year ago), but the average rental rate set a record at $830.34 per month, breaking the previous record of $807.21 set during the previous quarter. That makes 15 quarters in a row that the Colorado Springs apartment rental rate has increased over the previous year.

English: Centennial Plaza Apartments, 516 E Ki...

Centennial Plaza Apartments, 516 E Kiowa St, Colorado Springs, CO (Photo credit: Wikipedia)

The average rent for a one-bedroom apartment is now $730.54, and two-bed, two-bath units are commanding an average of $1005.40. Three bedroom apartments are renting for an average of $1192.17.

In further promising news, although Denver has now returned to its pre-recession rental rates (adjusted for inflation), Colorado Springs still has a way to go. Therefore, there is still room for rental increases just to get  back to what folks were paying here in 2001-2002.

You can read the full report at the Colorado Division of Housing site.

Colorado Springs Vacancies Continue to Drop

For the eighth quarter in a row, the vacancy rate in Colorado Springs has gone down, this time to 5.8%. The last time it was this low was in the third quarter of 2001 when it was at 5.4%.

As you’d expect, when the vacancy rate drops, the average rent goes up. Last year the average rent in Colorado Springs was $710. Now that same unit goes for $737, a 3.7% increase. In fact, the average rent has gone up for five quarters in a row, year over year.

These were just a couple of the facts in the new report released by the Apartment Association of Southern Colorado and the Colorado Division of Housing.

According to Ryan McMaken, a spokesman with the Division of Housing, “It’s taken 10 years for the vacancy rate to return to where it was before the 2002 recession hit Colorado, but with so little new construction, and with a continued troop presence in the region, it looks like rates may stay low, at least in the near term.”

Skyrocketing Rents Spell Opportunity

A recent post on CNNMoney.com claims apartment rents may soon rise by double digits in the hottest markets. And even in the rest of the country, rents may jump 7% in each of the next two years, according to Peggy Alford, CEO of Rent.com. She also predicts a national vacancy rate of 5% in 2012.

Chart of rising rents forecast.

Rising rents

“There will be an envelope of two or three years,when the rise in demand for rentals will exceed the industry’s ability to meet it,” says Chris Macke of  CoStar.

 

Much of this demand is fueled by the estimated 1.2 million young adults who moved back home with their parents from 2005-2010, and who are now starting to emerge on their own. In addition, more current roommates are beginning to go their own way as well, creating the need for two housing units when one sufficed previously.

The icing on the cake for apartment owners is the fact that virtually nothing has been built in the last few years, and new developments are only beginning to make a comeback. Part of the delay was due to lack of demand, and part because of the difficult loan environment.

A related article you may find useful:

Investing in Apartments: 3 Reasons Why Now Is a Great Time

And here’s a link to the source for this blog:

Rents are rising — lock in your lease (money.cnn.com)

Investing in Apartments: 3 Reasons Why Now Is a Great Time

Everywhere one looks today there are growing signs that investing in apartments is a smart idea now and will be for the next several years.

The part of the American Dream that includes a white picket fence and your very own home is fading for many. In the second quarter of 2010, only 66.7% of households owned their own home. That’s the lowest number recorded since the last quarter of 1999. Many of those former homeowners are now renting their homes, and some have gone back to apartments.

In fact, when a Trulia survey recently asked, “Is home ownership a part of your American Dream?”, only 72% responded, “Yes”, compared to 77% just six months earlier.

In a May 2010 survey of over  2,000 U.S. adults, the National Apartment Association found that 76% of the respondents now believe that renting is a better option than owning. This is up from 71% in 2008. Half of the people cited financial reasons, while a full 64% enjoy having no maintenance responsibilities.

In addition to the positive signs from these surveys of American’s attitudes, current apartment owners are reporting improving conditions. The National Multi Housing Council performs a quarterly Survey of Apartment Market Conditions. One section measures “market tightness.” A Market Tightness Index reading above 50 indicates that, on balance, apartment markets around the country are getting tighter; a reading below 50 indicates that market conditions are getting looser; and a reading of 50 indicates that market conditions are unchanged. The July 2010 index stood at 83, up from 38 in January and 11 recorded in January 2009. This is a clear trend showing fewer vacancies in existing apartments.

SAN FRANCISCO - JULY 08:  A sign advertising a...
Image by Getty Images via @daylife

Greg Willett, VP of MPF Research claims that, “Demand is stunningly high in the first half of 2010.” The number of occupied units increased by 215,000 in the 64 largest U.S. markets through June. That’s almost twice as many as in all of 2009. The overall vacancy rate in the same markets declined to 6.6% from 8.2% in December. Closer to home, the Colorado Springs vacancy rate dropped to 5.8% in the second quarter, the lowest rate recorded since the 5.4% reported for the third quarter of 2001.

The third main reason smart money is moving into apartment investing is the tsunami of new renters coming of age in the next few years. These “echo boomers”, children of the original baby boomers, are now in their 20s and 30s, typically prime renting years.

The Baron’s cover story of July 26, 2010, entitled Renter Nation, claims that, “Roughly 10 million extra folks could be moving into rentals in the next five years.” In addition, the National Association of Home Builders chief economist believes the 83 million echo boomers entering the market over the next decade is a positive demographic trend for the apartment market.

Since improving apartment market conditions usually follow job growth, experts are speculating as to why this improvement is happening without it. Maybe the economy has stabilized to the point that young workers have enough confidence in their current job to move out of home or split up from their roommate, but not enough to put a down payment on a home (if that’s even a goal).

So, because of changing American attitudes about home ownership, decreasing vacancy rates, and the demographic bubble approaching, it’s looking like a great time to be investing in apartments.

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Colorado Springs Apartment Vacancy Rate Plummets

According to a report released last week by the Apartment Association of Southern Colorado and the Colorado Department of Local Affairs’ Division of Housing, the first quarter’s rate of 6.9% is the lowest vacancy rate recorded since the third quarter of 2001 when vacancies were 5.4%. The very next quarter of 2001 saw the vacancy rate jump to 8.9%, and it’s been above 8% ever since.

FORT CARSON, CO - JANUARY 28:  Children embrac...
Image by Getty Images via Daylife

Most of the credit for the improved stats goes to the influx of soldiers into Fort Carson. We’ve been hearing about this troop consolidation for several years now, but it appears to be finally happening. Although, interestingly enough, the lowest vacancy rates of 4.5% to 5.1% are found in the northern part of town, far from Fort Carson on the southern edge. In fact, the areas nearest the Post still have a vacancy rate of 14.2%, although this is a considerable improvement, since it has been over 20% in recent years.

In spite of the good news on the vacancy front, new jobs are still scarce, so rents are staying put, averaging about $710 for the first quarter of this year.

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