The Apartment Association of Metro Denver just published in their Member Directory a vacancy survey through the 3rd quarter of 2008. the survey is compiled by Gordon Von Stroh. In the 3rd quarter of 2008, the lowest vacancy rate reported was 1.1% in the area around the University of Colorado. The rest of the city of Boulder, excluding the university area, had a vacancy rate 2.4%. The vacancy rate in Longmont dropped from 19.6% in the second quarter to 10.5% in the third quarter. Metro wide, the vacancy rate had peaked in the first and second quarter of 2003 at a rate of 13.1%. The reported third quarter 2008 vacancy rate, metro wide is 6.5%.
Generally, I think we are seeing vacancy rates drop as credit has tightened, making it more difficult for homebuyers. When credit was freely obtained, it often took less cash out of pocket to purchase a home than it did to come up with the first month’s rent and damage deposit. We are also seeing many families that lost their home to foreclosure, enter the rental market once again.
The population continues to rise and supply of newly constructed rental units has come to a stand still. Therefore, I think the vacancy rate will continue to fall as people still need a place to live, regardless of economic conditions. However, the employment levels are still critical. If you don’t have a job, you still need to occupy a home, but may not be able to pay rent. I’m not sure what the vacancy rate would be if you could factor in the number of people occupying a rental, but not able to pay rent.