Friday, February 26, 2016

Colorado Springs apartment vacancies remain near 14-year lows

During the third quarter of 2015, the average multifamily vacancy rate in Colorado Springs dipped to 4.2 percent, which was the lowest vacancy rate recorded since 2001.

During the fourth quarter of 2015, the vacancy rose slightly to 5.0, but remained down from the fourth quarter of 2014, which had a vacancy rate of  5.3 percent:

Clearly, the overall trend has been downward since 2004. In fact, the vacancy rate even went down in the midst of the 2008-2009 financial crisis. This was unusual because vacancy rates typically increase when unemployment increases. However, in Colorado Springs, the declining vacancy may have reflected a flight from homeownership to rental apartments in the wake of high foreclosure rates. 

In order to check for seasonal factors, we can also separate out the quarters to see how 2015's fourth quarter compares to other fourth quarters. As expected, it turns  out that 2015's fourth quarter was the lowest vacancy rate found in any fourth quarter over the past decade: 

Rich Laden reports in the Colorado Springs Gazette:

Several factors are driving rent increases, industry experts have said. Even as historically low mortgage rates make homebuying attractive, many people want to live in apartments. In particular, mobile-minded young people - so-called millennials - don't want to be tied to a mortgage and are driving demand, experts have said. Empty nesters who are downsizing and want maintenance-free living also are a part of the mix of renters. At the same time, the construction of Springs-area apartments isn't necessarily keeping pace. From 2012 through 2015, nearly 2,800 units were built and added to the overall supply of apartments for rent, the Housing Division and Apartment Association report showed. And yet, an additional 3,366 apartments were rented and occupied during that four-year span.What's more, apartment construction during the recession years was minimal; only 778 new units were added in the Colorado Springs area from 2007 through 2011.

For more on this, see our previous articles here at "Colorado Springs permits hit four-year low" and "Colorado Springs: New housing construction not keeping up with household creation."