Vacancy rate drops to 5.5%; rent increases
Grand Junction’s rental market reached its tightest point in three years during the second quarter of 2012, when the area recorded an apartment vacancy rate of 5.5 percent.
A more limited supply of apartments to rent in Grand Junction led to an increase in rent prices, according to a quarterly vacancy and rent report released Thursday by the Colorado Division of Housing. The average monthly rental price in Grand Junction jumped $44 year-over-year in the second quarter and cost $50 more than the average local rent in the first quarter.
Cindy Hoppe, property manager for Bray Property Management, said rents aren’t decreasing and special offers like one month of free rent are disappearing, but she hasn’t seen large increases in rent. Supply and demand are tight with the lower vacancy rate, she said, but unemployment and stagnant wage growth are making it difficult for landlords to raise rents dramatically on existing tenants.
“We get resistance to $10 (increases),” Hoppe said.
Grand Junction’s economy means its rent growth and vacancy decline aren’t as dramatic as movement in some Front Range metropolitan areas with lower unemployment rates and more multi-family housing construction, according to Ryan McMaken, spokesman for the Colorado Division of Housing. The sluggish economy also coincides with Mesa County having the worst foreclosure rate of any metropolitan area in Colorado, McMaken said.
But that may have some positive effects on the rental market as investors swoop in to buy foreclosed housing at a reduced price and turn it into rental units, said Ron Throupe, author of the division’s quarterly vacancy and rent report.
“If they think they can fix (foreclosures) and flip them, investors will do that. If they want to keep them, they’re looking at buying in areas they see as stable” and renting, Throupe said.
McMaken said high foreclosure rates can lead to some renters deciding to drop their rent in favor of a low mortgage payment on a foreclosed or low-price home, but not always.
“If they’re a person who has a job and good credit, buying is viable for them, but if they don’t have good credit, they’re younger, and their employment is shaky, they’re going to keep renting,” McMaken said.
Hoppe said 123 people signed new leases with the company in the second quarter of 2012, up from 105 in the second quarter of 2011. While June and July are typically Bray’s busiest months for people moving around, Hoppe said this summer may be experiencing more activity as Colorado Mesa University students decide not to live on campus. The university requires most freshmen and sophomores to live on campus but due to limited room availability, the school has granted most requests for sophomores who asked to live off-campus, according to John Marshall, CMU vice president for student services.
Hoppe said she expects leasing activity to continue at a steady clip through the rest of the summer and fall, but she doesn’t envision much change in the availability of new housing unless construction costs start to match the amount investors can expect to get back in rent. “Construction costs are still higher than rent per square foot,” Hoppe said.