Statewide vacancies in affordable housing fell during the second quarter, dropping to 4.7 percent, from first quarter in the first quarter, according to a new state report.The Affordable Housing Vacancy and Rent Survey, released today by the Colorado Division of Housing and the Colorado Housing and Finance Authority, tracks vacancies in units with restricted rents that cater to low-income households. The units are generally owned and managed by housing authorities, non-profits, and for-profit agencies.

The tightest markets for rent-restricted housing were in Grand Junction, Pueblo, the Denver metro area, and Colorado Springs where vacancy rates were 1.7 percent, 4.1 percent, and 4.3 percent, and 5.1 percent respectively.

The highest vacancy rates were found in the northern Colorado communities of Greeley, Loveland, and Fort Collins, where vacancy rates stood at 5.6 percent, 7.8 percent, and 8.2 percent respectively.

In general, a vacancy rate of 5 percent is considered the “equilibrium” rate by industry researchers. Vacancy rates below 5 percent indicate a tight market.

With the exceptions of Pueblo, Douglas County, and the northern Colorado communities, all areas showed a decline in vacancy rates since the first quarter of 2007. The survey has only been conducted since the third quarter of 2006, so year-over-year data is not yet available.

The overall vacancy rate in the metro Denver area was 4.3 percent, with the Boulder/Broomfield area reporting the lowest rate at 2.9 percent. Douglas County reported the highest vacancy rate in the metro area at 6.9 percent.

Vacancy rates for all metro counties were Adams, 5.6 percent; Arapahoe, 5.1 percent; Boulder/Broomfield, 2.9 percent; Denver, 3.5 percent; Douglas, 6.9 percent; and Jefferson, 4.1 percent.

“In many ways, this study is a study of service-worker housing,” said Kathi Williams, Director of the Colorado division of Housing. “The Boulder/Broomfield area is a very good example of this. Food-service and other low-wage service jobs are plentiful in these areas, but multifamily housing in the area can be quite expensive. So workers turn to rent-restricted units offered by non-profits and other organizations.” According to the Colorado Department of Labor and Employment, there are approximately 14,000 food-service workers in Boulder and 108,000 in the Denver-Aurora area.

Williams points out that renters tend to have lower incomes than homeowners. For example, in the Denver area, the area median income, which includes household incomes of both renters and homeowners, was $71,300 for 2006. The renter household median income for the same period was $37,316. “This means we’re looking at a lot of renter households in which workers are earning a little more than half of the area median income,” said Williams.

Each quarter, the Colorado Division of Housing also releases a “market-rate” vacancy survey that surveys vacancies in units at all rent levels.

“It is often helpful to look at the differences between the market-rate vacancies and the affordable vacancies,” said Gordon Von Stroh, Professor of Business at the University of Denver, and the report author. “The market-rate units and the affordable units should not be attracting the same households. This is why we sometimes see much lower vacancies among rent-restricted units than market-rate units.”

Von Stroh points to Colorado Springs and Pueblo as examples. During the second quarter, Colorado Springs reported a vacancy rate of 9.6 percent in market-rate units, but a vacancy rate of 5.1 percent in rent-restricted units. Pueblo reported market-rate vacancies at 8.4 percent and rent-restricted vacancies at 4.1 percent. The metro Denver area reported a market-rate vacancy of 6.2 percent compared to 4.7 percent for rent-restricted units. During the second quarter, only Douglas County reported a rent-restricted vacancy rate (6.9 percent) above the market-rate number of 5.8 percent.

The Colorado Division of Housing and the Colorado Housing and Finance Authority provide the affordable housing vacancy survey each quarter as a service to housing organizations that analyze the demand for affordable housing.

Source:

http://www.rockymountainnews.com/drmn/real_estate/

article/0,1299,DRMN_414_5717324,00.html