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Home rental vacancy rates fall to new lows

By John Rebchook, Rocky Mountain News (Contact)

Published November 20, 2007 at 9:22 a.m.
Updated November 20, 2007 at 9:22 a.m.

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Vacancies in "for-rent" condos, single-family homes, and other small properties across metro Denver dropped to 3.9 percent during the third quarter, according to a report released today by the Colorado Division of Housing.

Vacancies dropped for the fifth quarter in a row, and 3.9 percent is the lowest vacancy rate recorded since the survey was launched in 2001.

The vacancy rate was 4 percent during the second quarter of this year, and was 6.4 percent during the third quarter of 2006.

The lowest overall vacancy rate was found in Boulder and Broomfield counties at 2.3 percent. The highest vacancies were in Jefferson County, which reported 4.6 percent.

The largest declines in vacancies were found in Adams County, where vacancies dropped substantially from 9.3 percent during the third quarter of 2006 to 3.3 percent during the third quarter of 2007. No counties reported increases in vacancies compared with last year's third-quarter rates.

Vacancy rates for all counties surveyed were: Adams, 3.3 percent; Arapahoe, 4.1 percent; Boulder/Broomfield, 2.3 percent; Denver, 3.4 percent; Douglas, 3.7 percent; and Jefferson, 4.6 percent.

Of all housing unit types surveyed, triplexes showed the highest vacancy rate of 7.8 percent, up from 6.0 percent a year earlier. Vacancies in for-rent condominiums dropped to 3.3 percent from 7.4 percent reported a year earlier. Single-family homes reported vacancies at 4.3 percent, down from 6.5 percent a year ago. All other dwelling types reported vacancies below 5 percent, and all dwelling types other than triplexes reported drops in vacancies since the third quarter of last year.

In general, a vacancy rate of 5 percent is considered the "equilibrium" rate, and vacancy rates below 3 percent indicate a very tight market.

The for-sale market continues to impact the rental market.

"What we're seeing with vacancies in the larger multifamily market appears to be all the more true in the small-properties market," said Kathi Williams, director of the Colorado Division of Housing. "Rental housing is simply more attractive than for-sale housing for a lot of people right now. If they're waiting for a really great deal to come along before buying, they may be figuring that it's best to just rent a house with a yard in the mean time."

Average rents increased to $967.29 for the third quarter of 2007, up from $946.07 during the second quarter and up from $957.28 during the third quarter of 2006. Rents were highest in Douglas County at $1,380.43 and lowest in Denver County at $907.82. Average rents increased the most in the Boulder/Broomfield area, rising to $1,361.25 from $1,202.80 a year ago. Average rents increased in all counties during the past year.

Average rents for all counties were: Adams, $1,029.45; Arapahoe, $963.16; Boulder/Broomfield, $1,361.25; Denver, $907.82; Douglas, $1,380.43; and Jefferson, $938.47.

The Colorado Statewide Vacancy and Rent Study is released each quarter by the Colorado Division of Housing. The report is available online at the Division of Housing web site: http://dola.colorado.gov/cdh