Metro Denver's apartment-vacancy rate has reached its lowest level since 2001, as construction of new units continues to slow and rising interest rates discourage some potential homebuyers.
The second-quarter vacancy rate was 6.9 percent, according to data released Wednesday by the Apartment Association of Metro Denver. The vacancy rate was 8 percent in the second quarter of 2005.
While new construction of rental properties has tapered off, experts said the decrease in the vacancy rate can also be attributed to trouble in the for-sale housing market. Due to increases in foreclosures and interest rates, for-sale housing is becoming less attractive to some people. Colorado notched the highest home-foreclosure rate in the country in the second quarter. People displaced from their homes often turn to rental properties.
I can also think of a couple of more positive reasons for the vacancy decline other than the bad news in the residential re-sale market. That would be JOBS. Denver has been on a hiring binge and for the most part, these are not executive level positions. There are a significant number of entry level jobs that do not translate to a three or four bedroom home in the suburbs. In a couple of years, they will!! The other reason is a migration out of CA. Colorado is not the only state receiving this influx. In addition to Colorado, Californians are displacing to NV., OR., WA , TX and Utah. Fully 60% of my internet buyers are coming from CA. If you do not own a rental property, investment in a REIT fund vested in CO. appears to be a great investment.
Average monthly rent for a two-bedroom, one-bathroom apartment in the metro area was $813.30, up from $793.93 the previous year.
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