A Wrap Up on the 2014 Rental Market

As home ownership in the U.S. sinks to a 19 year low of 64.4% more attention is being focused on the rental housing stock. Vacancy has dipped to 4.7% tipping the scales in the landlords favor.  An evenly balanced market is considered to have a vacancy rate of 5%. The lower supply increased rental rates. Nationally the $420 billion dollars paid in rent in 2013 increased to $441 Billion in 2014 a 4.9% increase. Rent growth for 2015 is expected to increase again with strong job growth, inflation, and the entrance of the millennial generation into the work force seeking independent housing.

Denver is ranked 5th on the National Apartment Index (NAI) which measures metropolitan areas with the lowest vacancy, strong job growth, strong rent and demographic trends. New York and San Francisco hold the top two places on the NAI. Nearly every industry in Denver is expecting strong job growth, which will continue to strengthen our economy and maintain developers’ optimism.

Average rents in the Denver area increased by 12%. The total rents increased from $4.5 billion paid in 2013 to $4.9 Billion in 2014. This 12% increase means tenants shelled out $474 million more dollars in 2014.   How do these numbers impact the single tenant? The average tenant is paying $86 more per month equating to $1,032 more per year in rent. Experts are forecasting rents to increase again in 2015 by as much as 8% which is expected to bring the average rent up from $1,168 in 2014 to approximately $1,260 for 2015.

Vacancy in Denver dropped from 5.2% in 2013 below that balanced market number of 5% to 4.7% in 2014. The delivery of several new apartment complexes in the Denver area for 2015 is expected to raise vacancy rates slightly as the market absorbs the new inventory. The quality of the new inventory will continue to raise the average rent despite the anticipated increase in vacancy.

Developers, attracted by the employment forecast in Denver, have delivered 7,588 units in 2014 and expect to deliver even more units in 2015. The large institutional purchasers have many investment opportunities for downtown Class A properties.

What does this mean for the average investor? If you have failed to raise your rents in the last two years you are at least 20% behind market rents. This is where hiring an expert in the industry like 8z Rentals can keep your investment performing at its peak.  Many times we are able to increase rents enough to cover the costs of management. That frees you up for more valuable things in life like time with the family or finding more deals!

Call us anytime we are here to help!

How Will New Construction Affect Rent & Vacancies in 2014?

Lots of new construction is on the horizon for Colorado’s Front Range. So the question is, “how will this new construction going impact the rental market?” Vacancy rates have increased slightly as a result of the additional inventory. Landlords who have been remodeling older buildings, are adding these units to the rental inventory, and thereby increasing the vacancy rates. As a result of the newer nicer product the average rental rates have increased which is good news for investors.

A healthy balanced vacancy rate is considered to be about 5%. This rate keeps owners and tenants in check, and gives owners the ability to maintain the housing stock with repairs, while not having to give large concessions for signing up new residents. When the vacancy rate drops too low, the rental rates tend to spike, hurting residents ability to secure adequate housing at reasonable prices. Inversely, when there are higher vacancy rates, like those we have experienced over the past 7 years, landlords had a hard time maintaining their housing stock and were forced to provide large signing concessions, and struggled to balance basic upkeep with diminishing quality of available tenants. This downward spiral is very difficult for many apartment owners to balance, as landlords become strapped with diminished cash-flow.

Statewide we are hovering with vacancy rates just over the 5% mark, at 5.4% in the last quarter of 2013. This is up a little bit from the vacancy rate of 5.2% in the fourth quarter of 2012.  The increased vacancy overall seems to be a good sign since it is a reflection of the new and updated apartments being made available for residents. Some newer amenities being offered to residents are free cyber café’s with in house barista’s, free wireless, cool new dog parks with fun features and even dog washing stations aka Pet Spas, larger storage lockers for all of your Colorado toys, laundry facilities with text messaging when your load is done, larger package lockers with text notification of your code to access your package. Of course all of this comes at an increased cost. The average rent has hit a record fourth quarter high of $992 for the state, this is up from $944 in the fourth quarter of 2012.

 

A Local Look at Rents & Vacancies Across Colorado

Fort Collins/Loveland

Fort Collins/ Loveland outpaced Metro Denver for Average rent. Fort Collins/ Loveland was $995 in the fourth quarter compared to Denver at $992. The vacancy rate dropped to a new ten year low of 2.1% making for an extremely tight market for residents.

Greeley

Greeley had a record $64 increase in the average rent to $756 in the fourth quarter and an increased vacancy rate with a 2 year high of 6.3% but these statistics were invariably affected by the addition of 90 new units to such a small submarket. Overall Greeley is very strong and the absorption of these units should increase the average rent overall while updating the housing stock.

Boulder/Broomfield

Vacancy rates dropped again this year to 3.4% for the fourth quarter of 2013 down from 3.7% in the fourth quarter of 2012.   The vacancy rate for the area surrounding CU in Boulder dropped from 2% in the third quarter of 2013 to 0% in the last quarter of 2013. The average rents in Boulder/ Broomfield steadily rose from $1,104 in the last quarter of 2012 to $1,198 in the last quarter of 2013.

Denver Metro

Vacancy rates in Denver have risen to a two year high of 5.2% for the 4th quarter of 2013 up from 4.9% in the fourth quarter of 2012. This is a strong reflection of the large number of new apartments being added to the inventory as well as remodeled units being held vacant during the construction process. The average rent continued to grow despite the increased vacancy which is the best indicator that the market can absorb the new inventory. The average rents rose from $986 in the fourth quarter of 2012 to $1,041 in the 4th quarter of 2013.

Overview of the vacancy rates and average rents by Area/ County for the 4th Quarter 2013:

Area/ County                                   Vacancy Rate                       Average Rent

Fort Collins/ Loveland                           2.1%                                        $995

Greeley                                                          6.3%                                        $756

Adams                                                            5.3%                                        $948

Boulder/Broomfield                                 3.4%                                        $1,198

Denver                                                            6.1%                                        $1,064

Arapahoe                                                       5.2%                                        $995

Douglas                                                           5.0%                                        $1,236

Jefferson                                                        4.6%                                        $994

Rising Rents – What’s a Renter To Do?

Image Courtesy of winnond / freedigitalphotos.net

Image Courtesy of winnond / freedigitalphotos.net

Forrest Noble, President of 8z Rentals said “rent costs are definitely on the rise for the consumer in Colorado’s well populated front range region.  Not only have vacancy rates remained low since 2006, many tenants who would be qualified home-buyers remain in the rental market.”  Noble explains that many home buyers are choosing not to purchase, due to conditions like tough loan qualifications, high interest rates, and job mobility.

Located in the front range communities of Colorado, the property managers at 8z Rentals, have seen rental costs on the rise throughout the six counties that they serve.  These counties vary from primarily suburban like Jefferson, Arapahoe and Broomfield counties, to the more urban Denver county, to the historically high rent Boulder county.  And stats from Colorado’s Division of Housing back up Noble’s team’s observations.  On February 10th 2014, Ryan McMaken, from the Colorado Division of Housing, reported that, “during the fourth quarter of 2013, the average rent in metro Denver rose to $1,041, increasing 6.4%, or $63, from 2012’s fourth-quarter average rent of $978” (Source).

If rising rent costs are affecting a tenant’s budget, Noble and his team recommend tenants adjust their search parameters.

-Explore other areas. While rent prices are on the rise across the board, some neighborhoods or cities typically have lower rent.  Compromising for a longer commute may also allow you to get more square footage, or a newer property at the same or lower price.  Moving further may mean a longer commute, but it if you’re okay with that, it could also save you money.

-Re-evaluate your housing needs.  If your rent has gone up on the two bedroom condo, or the single-family home you’re leasing, you may want to re-evaluate the amount of space you need.  If you don’t utilize all the space in the property you’re renting, downsizing could save you money on your rent.

-Ask if a longer term lease is available.  If you’re pretty certain you’re going to be sticking around an area for the foreseeable future, ask the property manager or landlord if a longer term lease might be available for a lower rate.  As leasing expenses or periods of vacancy affect a landlord’s bottom line, it may be advantageous to them, and you.

-Try negotiating some of the utilities into the lease, such as water or trash, or even gas and electric.  Try offering to do the yard work or snow removal in turn for your landlord to pay a utility bill.  Be flexible and see what the landlord may be willing to compromise with you on.

Looking for a place to rent?  We have rental listings throughout the Denver metro area, from Highlands Ranch through Longmont.

Colorado Job Growth Lowers Housing Availability – How Homeowners Can Help

A recent 9News.com story covered the tight Denver area rental market.

New jobs throughout Colorado are bringing in lots of new residents from out of state.  And along with a new job, new residents must also find a place to live.  Even after years of low vacancy rates, as the Colorado economy continues to grow, so does the demand for housing.

How can Denver area residents and homeowners make a few bucks, and help with the low vacancy rates?

– Carriage House: Some old Denver homes have a separate carriage house.  Convenient for storage, yes.  But, why not clean it out, renovate, and create some passive income with that space?

– Snowbirds: Many retirees love Colorado summers but would rather stay clear during the cold snowy winters.  Retirees can enjoy a little extra income for a leasing their home during the months they are away.  Their house doesn’t look empty, and the sidewalks stay shoveled after snowstorms.

– Sabbatical: Many of our landlords are leasing out their primary residence for the first time.  Whether they’re taking a sabbatical from work, or taking on a work project out of state for a few months or a few years, renting their home provides extra income to cover expenses, and to keep the home for their return to town.

Never been a landlord before?  That’s okay.  As property management experts, we discuss homeowners’ needs to market the vacancy, and manage the property, to save you time and stress of having rental property.

Boulder and Broomfield Counties Have Seen a Decline in Apartment Vacancy Rates

apartment.02Apartment vacancy rates in Boulder and Broomfield counties are on the decline while the Denver Metro area’s rates have increased slightly. The Boulder County Business Report is stating that there is a year-over-year fourth quarter decrease in apartment vacancy rates in 2013 while the rate in the Denver Metro area has increase to a 2 year high according to the Colorado Division of Housing and the Apartment Association of Metro Denver. The reduction represents a year over year analysis. While on the whole the rate of apartment vacancy has increased a bit from the Boulder and Broomfield low rates of 2.8 percent in Q3 of 2013 we are still looking at an overall decrease.

Boulder: The city of Boulder, excluding the area around the University of Colorado, had a 3.8 percent vacancy rate in the fourth quarter. In the university area, Boulder’s rate dropped from 2.0 percent in the third quarter to 0.0 percent in the fourth.

Broomfield: Hundreds of new apartments are coming online in Broomfield. The city’s Q4 rate was 3.6 percent, up slightly over the third quarter but way down from the 6.2 percent rate it saw for the same period a year ago.

Longmont: Longmont’s rate inched up slightly from 2.7 percent at the end of 2012 to 3.3 percent for the most recent quarter.

Denver Metro: The Denver metro area’s rate hit 5.2 percent, its highest rate since hitting 5.4 percent for the fourth quarter of 2011.

Rental Rates: Rental rates in the metro area, however, kept rising. And Boulder and Broomfield counties were no exception. The average rent locally climbed to $1,198.13 per month, up from $1,194.19 in the third quarter and $1,103.61 a year ago.

Apartment vacancy rates are dropping making finding the perfect apartment, condo or house more difficult. If you are looking for a rental, 8z Rentals is ready to help you find your new space!

Read the full article here

Vacancy Rates Near CU Have Students Searching…

Classes may not be starting for another seventeen days at CU Boulder, but students who may just be returning to Boulder without a place picked out may be finding themselves in a pickle.

Demand is usually high for apartments and homes within a short walking distance or bike ride to campus.  This usually includes University Hill, Martin Acres, Goss, Grove and Aurora neighborhoods.  Yet this fall there are fewer properties available to rent across Boulder County, which has a 3.6% vacancy rate in a report by the Apartment Association of Metro Denver and the Colorado Division of Housing.  Immediately around campus, it has been reported by the Boulder newspaper, The Daily Camera and the Colorado Division of Housing that the vacancy rate around CU is 0%.

Some students needing a place to lease may look further away from campus or other communities within a short bus ride or drive away such as Superior or Lafayette.

A few good rules of thumb to consider when looking to rent as a CU student is to know where you’re living for fall semester by spring break.  High demand properties near campus are usually snatched up fast, even when the vacancy rates are not this low.

At these times it’s also important to plan where you will be returning to after studying abroad for a semester.  Many students who return in the fall to look for a place to live couldn’t search for a rental because they were studying abroad earlier that year for spring semester.  Nobody wants to pay for a semester’s rent when they are not going to be staying there.  Some students will arrange roommates and living situations where a room is traded between a friend going abroad spring semester with another friend returning from abroad for spring semester.  Just be sure to check with your landlord that it will be ok for someone to take over your portion of the lease.

If you are still looking for a place to lease, here are a few properties that are available you may want to take a look at:
1200 College Ave , #104, Boulder, CO 80302 End-unit 3 bedroom, 1.5 baths at the College Townhomes complex.

864 18th St , Boulder, CO 80302, A nice 2 bedroom 1 bath home is right across from the CU Music Building and just steps away from the CU Book Store.

You may apply or contact us from the listing page.

If you are looking for a property and it is not listed on our website, please feel free to contact us at 1.888.613.8832 – we may still be able to find you the property you’re looking for.

Year-Over-Year Rent Increases In Denver Metro Area

Feel like you had a better deal on your lease last year?  That may very well be the case if you live and rent in the Denver metro area.  Colorado real estate blogger, John Rebchook recently reported news of a high demand rental market in the Denver metro area on his blog Inside Real Estate News.

He reported with data collected by the Apartment Association of Metro Denver and the Colorado Division of Housing.

The average rent increased in all county areas, with Denver county and the Boulder/Broomfield area showing year-over-year increases of 75 dollars and 87 dollars respectively.

Average rents by counties were:

Adams, $906.
Arapahoe, $956.
Boulder/Broomfield, $1,091.
Denver, $1,005.
Douglas, $1,131.
Jefferson, $919.

Vacancy rates by county were:

Adams, 4.9 percent.
Arapahoe, 5.5 percent.
Boulder/Broomfield, 3.6 percent.
Denver, 4.8 percent.
Douglas, 3.9 percent
Jefferson, 4.0 percent.

These trends in the rental market continue what has been seen over the past several years. Many people who had to foreclose or short sale on their home are limited to the rental market for years. Many recent college graduates along with those who are not confident in their jobs also choose to rent rather than buy.  Plans and building is underway for new apartment developments around the Denver metro area but even after completion they are not expected to make a significant addition to the rental market to meet the demand to decrease prices.

If you are a homeowner or investor and are looking to lease out your home, please contact 8z Rentals. We would be glad to answer your questions about leasing your property in this market, and our marketing and management services to make your job easier.

http://8zrentals.com/company/contact
Toll Free: (888) 613-8832
Email: Contact@8zRentals.com