Affordable Apartments Scarce in Metro Area
Housing agencies conduct first study of vacancies and rents in affordable housing.
The vacancy rate for “affordable” rental units in the Denver Metro area was 3.8 percent for the third quarter of 2006 according to a new study released today by the Colorado Division of Housing and the Colorado Housing and Finance Authority (CHFA). Statewide, the vacancy rate was 4.7 percent.
Other market areas covered by the study include Colorado Springs, reporting 8.0 percent, Pueblo, reporting 4.0 percent, Greeley, reporting 2.9 percent, Loveland, reporting 8.2 percent, Fort Collins, reporting 6.7 percent, and Grand Junction reporting 7.9 percent.
By contrast, the market-rate apartment vacancy rate was 6.7 percent for the third quarter in the metro area. Colorado Springs market-rate units reported 11.3 percent vacancy and the Greeley area reported 7.3 percent, for example.
This is the first time the study has been conducted. The Colorado Division of Housing and the Colorado Housing and Finance Authority have commissioned the study to provide a more complete view of the demand for deed-restricted units around the state. However, since the study is new, it is not yet possible to identify trends in the numbers.
Kathi Williams, director of the Colorado Division of Housing, was not surprised by the results. “As we expected, the report shows the vacancy rates tend to be below those of market rate units. Even with only one quarter of data, it is clear that such units are scarce for many throughout the state. A vacancy rate in the three to four percent range, as we’re seeing throughout the Metro Area, is quite low.”
As expected, rental rates were below market rates as well. The study allows analysis of rental rate differences between different regions of the state such as the Denver Metro area which reported an average rent of $659.60 and Pueblo which reported a $401.40 average rent.
“It is not surprising that the need for affordable units exceeds the need for market-rate units,” said CHFA Executive Director Milroy A. Alexander. “While we anticipated the results, we felt the study was necessary so that the affordable housing development and finance community knew on which areas to focus and to what affordability level. Generally speaking, anytime a vacancy rate falls below 5%, a need for more housing is indicated.”
The study defines affordable units as units that have deed restrictions of rental rates due to federal, state, or local subsidies. Deed-restricted units are commonly those units that are owned or managed by local non-profits and rented as senior housing, workforce housing, or housing for the disabled. Residents must verify incomes below certain levels.
The reports will be available online at the Colorado Division of Housing web site (dola.colorado.gov/cdh/) and the Colorado Housing and finance Authority web site (www.chfainfo.com).
The Colorado Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type. All information is based on data received for the month of September, except for resident turnover, which is for the month of August.