Rents creep up; vacancies tighten
Apartments were more expensive to rent and slightly less available in Grand Junction during the fourth quarter of 2011 compared to the final quarter of 2010.
Grand Junction’s apartment rental market tightened to 7 percent vacancy in the fourth quarter of 2011, down half a percentage point year-over-year and down seven-tenths of a percentage point from the previous quarter, according to the Colorado Division of Housing.
At the same time, the median rent for a local apartment increased by $26.78 year over year to $664.15 in the fourth quarter. Average rent increased by $23.70 to $640.28 in the fourth quarter.
Property Manager Cindy Hoppe of Bray Property Management said she believes the rent increase resulted from landlords needing money to maintain their properties. She said the increase is the first year-over-year rent increase since the second quarter of 2010. That means some property owners may have felt the rental market stabilized enough for them to increase rent to a level that better covers their expenses as apartment owners, she said.
Colorado Division of Housing spokesman Ryan McMaken said Grand Junction bucked a usual trend of the vacancy rate increasing in the fourth quarter compared to the third quarter. That feat, combined with the fact single-family housing rentals are not included in the study, may mean Grand Junction’s rental market is even healthier than the housing division’s report may suggest, according to Hoppe. She said her company is leasing more single-family homes because many would-be home-sellers are renting their houses until home sale prices increase. Hoppe said multifamily housing will likely be more in demand when those property owners can get the price they want from a home sale.
“If multifamily doesn’t build something as things get better, and they are getting better ... that’s going to get tight, when people sell these houses they don’t really want to rent,” Hoppe said.
McMaken said the single-family housing rate may be closer to 4 or 5 percent in Grand Junction. Five percent vacancy is considered a health vacancy rate. He said the increase in single-family rentals gives renters more options, but he doesn’t expect multifamily renters to have more apartments to choose from any time soon because Grand Junction rents are still below the averages in other parts of the state.
“It’s not going to ramp up (apartment) construction. It doesn’t seem there’s any reason for banks to fund new construction out there because the rent doesn’t justify the building cost,” he said.
Even though more rentals are filled, and cost to rent is going up, McMaken said Grand Junction’s rental market is unlikely to go back to the 3 percent or lower vacancy rates the area experienced as recently as 2008. Although the local unemployment rate has been decreasing, McMaken said Grand Junction’s economy is further behind in its recovery than most other parts of the state.
“We’re in no danger of getting back to there,” he said of the boom-time vacancy rates.