Metro vacancy rate dips to a 5-year low

Average monthly rents about 5% below 2003 level

John Rebchook, Rocky Mountain News

Published May 25, 2007 at midnight

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The average vacancy rate for rental condos, single-family homes and other small properties in the Denver area fell to a five-year low of 4.2 percent in the first quarter.

That rate, though, isn't driving up monthly rents. Rents still are about 5 percent lower than they were in 2003, according to a study released Thursday by the Colorado Division of Housing.

A separate report by the Genesis Group, also out Thursday, said "foreclosures represent the most significant challenge contributing to the woes of both the new and resale housing markets." Genesis, which tracks the Front Range housing market, said foreclosures are creating an "involuntary supply" of homes, according to its report.

The thousands of foreclosed homes on the market are "threatening the health of metro Denver's housing market by directly and indirectly reducing demand for existing and new housing."

Kathi Williams, director of the Colorado Division of Housing, said the division's Foreclosure Hotline, (1-871-601-HOPE) is "trying to slow down this dumping of properties into an overall saturated market."

The average monthly rent for the first quarter was $937.18, up from $924.37 a year earlier but below the high of $982.53 in the first quarter of 2003, according to the housing division report by Gordon Von Stroh, a business professor at the Daniels School of Business at the University of Denver. He's been doing the study for the division since 2001.

The overall median, or middle, monthly rent for the metro area was $895; for Adams, $1,040; Arapahoe, $925; Boulder/Broomfield, $1,195; Denver, $820; Douglas, $1,295; and Jefferson, $825.

Typically, when occupancies rise, so do rental rates.

"I think people are waiting to see if the vacancy rate is holding steady" before they boost rents, Von Stroh said.

For seasonal reasons, landlords typically don't raise rents very much in the first quarter, "but they are going to start getting more aggressive," said Bob Alldredge of Jericho Properties.

Susan Melton, who heads the Denver chapter of the National Association of Residential Property Managers, said it is more difficult to raise rents in apartments, condos and small townhomes.

"Houses are renting quicker, and it is easier to raise the rents more," said Melton of Assured Management. "There is more of a big glut of townhomes and condos on the market than houses."

Average rents

• Metro-area average monthly rent

First quarter 2007 $937.18

First quarter 2006 $924.37

First quarter 2003 $982.53

• Median monthly rent first quarter 2007

Adams County $1,040

Arapahoe $925

Boulder/Broomfield $1,195

Denver $820

Douglas $1,295

Jefferson $825