Apartment hunters in Colorado Springs have had it pretty easy the last 10 years — low rates, big incentives and lots to choose from. Not anymore.
The Colorado Division of Housing released quarterly apartment vacancy statistics last week, which confirmed what people in the industry already knew — vacancies are at an all-time low.
Colorado Springs apartment vacancies dropped 15.7 percent from 6.9 percent in the first quarter of 2010 to 5.8 percent this year.
That has eliminated cushy lease incentives and sent rates climbing.
It’s also fed a sense of desperation for those in search of a home.
“For the first time ever, I have people taking places sight unseen,” said Jenn Ryan, a leasing agent at Sunflower Property Management. “People from out of town have always done that. But now, people who live here are doing it. They just want to get it before someone else does.”
The vacancy rates are different depending on the area of town. Security/Widefield/Fountain still has a 16.2 percent vacancy rate and saw rent prices fall quarter over quarter. But the Southwest and Northwest areas have seen vacancy rates well under 4 percent and rising rents.
Realtors and industry experts speculate that the surge of renters are both people who have lost homes to foreclosures or can’t afford the down payment needed to buy a home and military troops returning to the area from war and other downsizing bases around the country.
“Colorado Springs is a unique market,” said Ryan McMaken, economist with the Colorado Division of Housing. “It has behaved differently than anywhere else in the state.”
That’s mostly because of the military presence in the area, he said.
Vacancy rates in Colorado Springs spiked after the United States went to war in Iraq in 2001 and stayed consistently high. The rest of Colorado saw rises and dips based on other economic factors over the last decade.
“But Colorado Springs’ rates stayed high that entire period, 9 to 13 percent vacancy,” McMaken said. “Only now are they starting to come down.”
Rates have been consistently falling the last eight quarters, according to the division’s report.
“I think the vacancy rates are as low as they are because we have more troops back,” said Laura Russmann, executive director of the Apartment Association of Southern Colorado. “I don’t think anyone has thought of foreclosures as the cause.”
She said her members report that a large number of the people renting their units are military personnel. And the units closest to the military bases are the fastest to fill up, she said.
Because the units are going so quickly, most apartment complexes have stopped offering incentives, she said. Some used to offer one to three months of free rent as an incentive to sign a lease.
And, while prices haven’t gone up much, just $1 quarter to quarter, Russmann said, they will inevitably go up significantly without those breaks on the rent.
Mac Little, a leasing agent for Riverstone Residential, which owns and operates several apartment communities in town, said most properties have stopped offering the big incentives.
If there are more two-bedroom apartments available than other kinds of units, a property may knock $100 off the first month’s rent for those apartments, he said. But they used to offer a free month’s rent or even more.
A lot of the properties have also stopped offering short-term leases.
Ryan at Sunflower Property Management said she handles all kinds of units from single-family homes and condos to small apartment buildings and that they are all renting quickly.
This week, she had 10 units available out of the 698 units Sunflower manages.
None of their properties spend more than a week on the market unless they’re priced wrong, she said.
Theresa Jackson, who owns JaxSun Properties, also manages a wide variety of properties throughout town. They average a single day on the market, she said
“If they don’t accept pets, it takes a little bit longer,” she said, “a week.”
Because units are snapped up the day they’re posted, Jackson asks more for them. And she gets it. She recently raised the rent on a Stetson Hills property from $1,300 a month to $1,500.
“And we got it,” she said, “within days.”
She’s doing the same with a home in Fountain, the only available rental.
Ryan said Sunflower has also raised rents on its popular downtown properties by about 10 percent.
Jackson said she doesn’t think the military is responsible for the low vacancy rates.
“I saw the writing on the wall a year ago when I decided to get into property management,” she said. “There are 14 million people foreclosing on their homes. They can’t buy again. Where are they going to live?”
She noted that vacancy rates are low throughout the country, which is true.
Cites from Maine to San Diego are reporting record low vacancies and rising rents.
Jackson said she’s seen a lot of people moving into the rental market because they need to scale down.
As the military comes back, she said she knows it will effect the rental market, but she said she’s hopeful it could also jumpstart real estate sales in the area.
“Those people also tend to buy here,” she said.