Simple Supply and Demand
It was reported in a http://www.dailycamera.com/ story this morning that vacancy rates throughout the Denver Metro Area fell during the last quarter of 2007. Here is a quick excerpt from the story by Alicia Wallace.
"Apartment vacancies in Boulder — minus the "university area" — dropped to 2 percent during the last three months of 2007, making the city's rental market the tightest in the Denver metro area, according to a report released Wednesday. Near the University of Colorado campus, vacancies were slightly higher, at 3.7 percent, according to the Metro Denver Multifamily Vacancy and Rent Survey, a report released quarterly by the Colorado Division of Housing and the Apartment Association of Metro Denver. Vacancy rates in markets across Boulder and Broomfield counties varied widely, with Broomfield at 6 percent; "Boulder County-other," which includes Louisville, Lafayette and Superior, at 3.3 percent; and Longmont at 11.5 percent. Longmont's higher rate is the result of new rental units on the marketplace, said Gordon von Stroh, a University of Denver professor of business who researched and authored the report. Anything below 5 percent is considered a "tight" market, von Stroh said. "
I see the increasing demand for rentals locally caused by a few factors. One is normal supply and demand. Eight or nine years ago national developers identified our area as a place to invest. Large rental apartment communities sprung up everywhere. For some early projects this was a boon, full units and good rents. For some late arrivals it meant "Free Rent" signs and a low return on investment. After the tech bubble burst most plans for new rental units were scrapped. It has taken us a few years to fill those vacancies and in the interim rents fell. We still have people moving to our area and with the tightening of credit, many of them have to delay buying a home. Even the rise in foreclosures will help rentals. The people who lose their homes will become renters. Look at this post to see how this news fits into the upswing in the real estate cycle. Neil Kearney Kearney Realty Co. 303-413-6624