Rental Vacancies have Increased

Here’s a good sign that things are continuing to look up in the Grand Junction market. This June 5 article from the Business Times shows rental vacancy rates have increased, while still below national average, and rental prices continue to climb. This is a great opportunity for investors to look at buying rental units while prices are lower for purchasing and inventory is higher. Plus, interest rates are low and rental rates are steady, especially in the two-bedroom market.

Vacancy rates for Grand Junction apartments continue to rise — but so do monthly rents.

According to the latest results of a quarterly survey, the average vacancy rate for Grand Junction apartments rose nearly a point to 4 percent during the first three months of the year. That’s the highest level since a vacancy rate of 5.4 percent was reported in the third quarter of 2005. At this time last year, the vacancy rate stood at 1.8 percent.

But at the same time, average monthly rents continue to increase, climbing more than $14 to $680.35 in the first quarter of 2009. For years, Grand Junction reported some of the lowest apartment vacancy rates in Colorado, in turn raising rents as well as concerns about the availability of housing. In the second quarter of 2008, the rate fell to just 1.6 percent.

The vacancy rate has increased every quarter since then, however. The latest rate falls exactly in between what’s considered an equilibrium at 5 percent and a tight market at 3 percent. Grand Junction joins in a statewide trend toward higher apartment vacancy rates, said Gordon Von Stroh, a business professor at the University of Denver who conducted the survey for the Colorado Division of Housing. “In recent years, only certain areas of the Front Range have seen notable increases in vacancies. But we’re experiencing a more general rise now.” The statewide vacancy rate climbed to 8.5 percent. With the single exception of Fort Collins, all metro areas in the state reported increasing vacancy rates.

Low vacancy rates remained the case in some areas of Western Colorado, however, at 1.5 percent in Glenwood Springs and 2.1 percent in Eagle County. In Montrose, though, the rate increased to 9.4 percent. In Grand Junction, vacancy rates were lowest for two-bedroom apartments with one and two bathrooms at 2.7 percent and 2.8 percent, respectively. The rate was highest for efficiency apartments at 8.3 percent.

Vacancy rates were lowest for small apartment buildings with two to eight units at 2.4 percent and highest for large buildings with more than 100 units at 5.2 percent. Average monthly rents in Grand Junction have fluctuated over the last year, but jumped significantly between the fourth quarter of 2008 and first quarter of 2009. Over the past year, average monthly rents are up nearly $32. The average monthly rent is highest at $943.18 for three-bedroom apartments and lowest at $250.05 for efficiency apartments. Average rents also are higher for small apartment buildings at $795.50 than large buildings at $612.35.

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