The vacancy rate for apartments in a sample of Colorado cities has continued to drop, driven by the fact that more people are renting and few new apartments are being built. A new report from the Colorado Division of Housing notes that the recent vacancy rate is the lowest since the first quarter of 2001, when the rate was 4.3 percent.
"Three years ago, there was a craze that everyone should own their own home," said Gordon Von Stroh, a University of Denver business professor and the report's author. "We are past that. We are a lot more realistic now."
Von Stroh said wages haven't gone up and that the customary down payment on the purchase price of a home is 20 percent, a significant increase from two years ago. He said many can't afford the down payment.
"The American family is strapped," Von Stroh said. "Costs are going up. To buy a new home today is a significant chunk of money."
This report, though defined by the Division of Housing as "statewide," is based on a handful of Colorado cities. Ryan McMaken, Colorado Division of Housing spokesman, said that although there were small increases in vacancy rates in a few places, the state is moving toward fewer vacancies.
"The Denver area and northern Colorado have some of the tightest markets right now, and not surprisingly, in those areas we're also seeing some of the most sustained growth in rent in recent quarters," McMaken said.
The average rent in Colorado increased 2 percent from the second quarter of 2010 to the second quarter of 2011, rising from $862 to $877. Von Stroh said there haven't been significant rent increases in the past decade. With demand for rentals going up — some apartment communities report vacancy rates of 2 percent to 3 percent — owners of these investment properties are making a profit by hiking rents.
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