Springs apartments getting tough to find

Local apartments are getting tougher to find and rents are on the rise as a result, two reports show.

The local apartment vacancy rate dropped to 5.8 percent during January, February and March, down from 7.2 percent in the fourth quarter of last year, according to a Colorado Division of Housing and the Apartment Association of Southern Colorado survey of the market released this week.

The latest vacancy rate matched the one from the second quarter of last year and was the lowest since 5.4 percent in the third quarter of 2001, the Housing Division report shows.

Apartment Insights, an online research company, also pegged the first quarter vacancy rate at 5.8 percent, which it said was the lowest in at least five years.

Meanwhile, rents averaged $737 a month during the first quarter, down about $1 from the fourth quarter of last year, but up $27 from the first quarter of 2010, the Housing Division reported. The median, or midpoint, of all rents was $714.14 in the first quarter, up from $687.15 a year earlier.

Apartment Insights’ report showed that rents averaged $717 in the first quarter, a $20 year-over-year increase and the highest monthly rent in about five years.

Both vacancy rates and rents vary around the Colorado Springs area, depending on location, the age of the apartment building or complex and the types of amenities offered.

The changes in the apartment market mean different things for renters and landlords.

For the last several years as vacancies rose, apartment dwellers have enjoyed stable rents, along with concessions such as free utilities, said Doug Carter of Apartment Insights and a commercial broker for national real estate company Sperry Van Ness.

During that time, many apartment complex owners and landlords put off repairs and other improvements, Carter said. As apartments are in greater demand, owners and landlords have started to raise rents to catch up on deferred maintenance. Apartment maintenance and operation costs increased about 35 percent during a six-year span while rents were flat, he said.

“It’s been bad for this market that expenses have gone up pretty substantially and rents haven’t been able to keep up at all,” Carter said.

Vacancy rates have been falling the past two years after several years of increases. After the 2001 recession and after thousands of Fort Carson troops were deployed to Iraq and Afghanistan, vacancy rates soared to double digits and surpassed 13 percent in early 2005, according to the Housing Division.

But since thousands of troops have been transferred to Fort Carson in recent years or have returned from deployments, vacancy rates have fallen.

Apartments also are filling up, in part, because of changes in the single-family market. Some homeowners who obtained mortgages with little or nothing down and shaky credit histories have lost properties to foreclosure and have moved into apartments. Other buyers, meanwhile, are finding it more difficult to purchase because lenders have tightened borrowing rules — requiring bigger down payments and higher credit scores.

“People have decided they don’t need to rush to buy or they can’t get a loan or don’t have the credit they need,” said Ryan McMaken, a Housing Division spokesman.
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