Colorado Springs-area renters continued to pay more for apartments at the end of last year.
The average rent for a local apartment rose to $1,265.92 a month in the fourth quarter — shy of a record, but still $62.33 higher on a year-over-year basis, according to a survey of apartment owners and landlords by Ron Throupe, an associate business professor at the University of Denver's Daniels College of Business, and Jennifer Von Stroh of Colorado Economic & Management Associates in Denver.
Fourth-quarter rents last year dipped almost $11 from the third quarter. But fourth-quarter costs traditionally decline from the third quarter because landlords see fewer renters late in the year and therefore lower rates to woo tenants, said Laura Nelson, executive director of the Apartment Association of Southern Colorado.
The Springs-area apartment vacancy rate, meanwhile, dropped to 4.9% during the period, a decline from 5.3% in the third quarter and down from 5.8% a year earlier, the report by Throupe and Von Stroh shows.
A higher fourth-quarter vacancy rate might have been expected, since that's when the demand for apartments slows. The COVID-19 pandemic, however, might have caused more renters to stay put in the fourth quarter, which led to a tighter supply of available apartments, Throupe said in comments accompanying the report.
In general, the demand for all types of housing remains strong, and the apartment market is no different, Nelson said. The demand for apartments has been driven, in part, by millennials who don't want to be tied to a mortgage and empty nesters who want maintenance-free living, industry experts have said.
"It's a very hot housing market all the way around, including apartments," Nelson said.
Developers have taken notice, too.
Several out-of-state real estate companies are building apartment complexes in Colorado Springs, whether in suburban areas or downtown. In 2020, developers added 1,172 apartments to the market — 73 less than in 2019, but 37 more than in 2018.
"There's plenty to come," Nelson said. "There's a lot on the horizon. It is just a high demand area."
As part of their rent and vacancy report, Throupe and Von Stroh asked owners and landlords about the status of rent payments by their tenants during the fourth quarter. The majority of respondents said less than 5% of renters were delinquent.
Local, state and federal assistance programs likely have helped many renters make their payments on time, Nelson said.
"The state of Colorado and the city and the county have done a really good job of moving those funds quickly, from HUD (U.S. Department of Housing and Urban Development) and the various forces that they're coming in from," she said. "There are funds out there and there's more coming, and we hope they'll continue because we don't know when this pandemic's going to be over."