Colorado Springs-area apartment rents held steady in the third quarter, but it’s too soon to tell if rental costs have plateaued or if they’ll resume their record-setting climb, one industry expert says.
Rents averaged $1,156.70 a month from July 1 through Sept. 30, practically unchanged — six cents cheaper — from the second quarter when rents hit a record high, according to a report by the Colorado Division of Housing and the Apartment Association of Southern Colorado. Third quarter rents also were almost $24 a month higher than the same period in 2017.
The report shows about 750 newly built units were added to the area’s supply of nearly 49,500 apartments during the first three quarters of the year. More apartments, meanwhile, are in various stages of planning and construction, said Laura Nelson, the Apartment Association’s executive director.
Rents have been rising and setting records for the past five to six years, Housing Division reports show. Millennials who can’t afford a down payment for a house and baby boomers who want maintenance-free living have helped drive the market, Nelson said. A vibrant economy and more people moving to town also have stoked demand and helped boost rents.
“What’s really going to tell the story is when summer hits again and you’ve got this extra supply (of new apartments) and we see what the demand is and if the in-migration continues,” Nelson said of future rent hikes. “That’s really what’s been pushing it. There’s just a higher demand for rentals.”
The vacancy rate for local apartments dipped to 5.2 percent in the third quarter, a decline from 5.4 percent a year earlier and down from 6.3 percent in the second quarter, according to the Housing Division report.
The report also showed:
• Rents averaged $1,252.27 on Colorado Springs’ far northeast side, the highest for any area during the third quarter. The lowest average rents of $961.95 were found in the central area of the city.
• Apartments built since 2010 had the highest average rents of $1,485.39; 1960s-era units were the lowest at an average of $937.33.
• The Springs’ northeast side had the area’s highest vacancy rate of 5.9 percent in the third quarter; apartment supplies were tightest on the city’s southwest side, where the vacancy rate was 4.2 percent.