A strong demand for Colorado Springs apartments pushed the area's multi-family vacancy rate to its lowest level in almost 12 years during the first quarter, a report by the Colorado Division of Housing and the Apartment Association of Southern Colorado shows.
The vacancy rate from January through March dropped to 5.6 percent, down from 6.4 percent during the same period last year and 7.1 percent in the fourth quarter of 2012, according to the report. It was the lowest rate for any three-month period since 5.4 percent in the third quarter of 2001.
Colorado Springs' northwest side had a 3.7 percent vacancy rate in the first quarter, which was the area's lowest; the rate was highest on the city's southeast side - 7.3 percent rate.
Reflecting the rising demand for apartments, first-quarter rents averaged $787.74 a month - a nearly $33 spike from $754.77 during the same period in 2012, but down $3.21 from the fourth quarter's record high of $790.95.
Rents averaged $927.05 on the northwest side, which was the area's highest in the first quarter; the lowest average rent, $601.93, was found in the city of Fountain and unincorporated Security and Widefield, south of the Springs.
The ratcheted-up demand for apartments comes at a time when historically low mortgage rates are making it possible for many people to build or buy a single-family home. So why are apartments filling up at such a rapid pace?
Some of the same factors that are propelling housing - an improving economy and better job numbers - also are driving the apartment market, said Ryan McMaken, a Housing Division economist. A report this week showed the Colorado Springs-area unemployment rate fell to 8.3 percent in March, the lowest in four years.
'There's overall demand (for apartments) because people are staying in town and the employment situation is looking a little bit better, ' McMaken said.
What's more, despite the low mortgage rates, 'not everybody can afford a home or qualify for the loan, ' he said.
And as the single-family market improves, home prices are rising, which will keep some renters in their apartments, McMaken added.
'Clearly, more people are buying houses, ' he said. 'Prices of those houses will go up, too, and more and more people will be priced out even in the face of very low interest rates. '
Because of the demand, expect rents to continue to rise or hover near their record high, McMaken said. A decline in rents will happen only if the economy nosedives again, he said.
'Based on recent experience, it seems it would take a lot of worsening in the economy to drive rents back down, ' McMaken said.
The Housing Division and Apartment Association report is based on a survey of apartment owners and landlords, who submit their responses online. The first-quarter survey included information on 19,619 area apartments.
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