In a case of classic supply and demand, the Black Forest fire is expected to cause rental prices in Colorado Springs to continue their five-year climb and boost home sales in the city.
The fire destroyed more than 500 homes, and many of the occupants will have to find a temporary place to live. Rental property was already in short supply before the fire, said Bruce Betts, broker/owner of RE/MAX Advantage.
On Wednesday, the number of available rental properties in the Pikes Peak Association of Realtors Multiple Listing Service for Colorado Springs was 698, or a 1.5 month supply, Betts said.(The figure does not include private rentals.) The average rental price for those properties had increased to $1,289 per month, compared with $1,200 for the period from Jan. 1 to May 30, and Betts thinks the trend will continue.
"The rental market that is already very tight will now be tighter," he said, "and I think rent prices will continue to go up."
Dan Wright, owner/manager of Gloriod & Associates Property Management, said the number of people renting, rather than buying, has increased over the past three years because of foreclosures, job losses, and uncertainty surrounding the economy. There is also a steady supply of renters from the military.
Wright said the right property, in the right location at the right price, can be rented in less than a month. One home buyer closed on a three bedroom, three bath house near Union Boulevard and Vickers Drive on May 15; Wright had it rented by May 20. Wright's team manages 260 rental properties in Colorado Springs. He said his office had received about 20 calls from people who said they needed rental property because they lost their homes to the fire.
"The fire is definitely going to put pressure on the rental market," he said.
But not be all sectors of the rental market will be affected, he said. Most of the people who lost homes to the fire will want four- and five-bedroom homes, one of the tightestsegments of the rental market, Wright said.
Rents have been climbing in the area for about six years. In 2006, 3,053 Springs residencesrented for an average monthly price of $989, according to the MLS listings, Betts, said. Last year, more than 6,013 properties leased for an average of $1,220 per month.
Brett said the Black Forest fire could also boost existing home sales, as those who cannot afford to rebuild or don't want to, and those seeking rental property for fire victims, purchase single-family properties.
Sales for existing homes within the city already had improved from past years. Agents at Betts firm sold 680 homes from Jan. 1 to May 30, a 22.7 percent increase from the same time last year, he said.
"Our market sales were already strong last year and this year," he said, "and the rental market has been on fire for the last six years."
A total of 4,709 Springs houses, townhomes and condos sold throughout the city from Jan. 1 to May 30, according to the MLS. Betts said some Black Forest residents, especially those with ranch animals, may decide to buy existing homes in that area, rather than wait to rebuild or abandon Black Forest, depending on the amount of destruction to their homes, barns, pastures and other structures.
Sixty-five Black Forest homes sold for an average price of $376,277 from Jan. 1 to May 30, he said. There were 130 homes listed for sale in that area as of Wednesday.
"Which says the demand for property under $500,000 is very strong in that area, and that is true all across our market," Betts said.
Contact Ned Hunter: 636-0275.