Summit County rent spikes as vacancies continue to lag behind housing demands
June 19, 2014
By the numbers...
The Colorado Division of Housing recently released a survey that shows average rents across the state are on the rise, as new construction fails to maintain pace with job growth and housing demands. Below are some stats pulled from the survey.
• Colorado total vacancy rates and average rent during the last decade
— First quarter 2004: 11.2 percent vacancy rate, $772.16 average rent
— First quarter 2014: 5.2 percent vacancy rate, $1,026.40 average rent
• Average rent first quarter of 2014 in the survey area
— Colorado Springs: $822
— Fort Collins/Loveland: $1,183
— Grand Junction: $525
— Greeley: $793
— Pueblo: $595
• Vacancy rates by local market areas for first and third quarters 2013
— Summit County: 2.1/4.1
— Eagle County: 4.5/8.8
— Aspen: .9/2.5
— Steamboat Springs: 5.8/17.1
• Average rent by local market areas first quarter of 2009 and third quarter of 2013
— Summit County: $886 / $994
— Eagle County: $1,069 / $992
— Aspen: $1,031 / $1068
— Steamboat Springs: $753 / $726
• Average rent for apartments during the first quarter of 2009 in Summit County
— One bedroom: $770
— Two-bed, one-bath: $794
— Two-bed, two bath: $880
— Three bedroom: $980
• Average rent for apartments during the third quarter of 2013 in Summit County
— One bedroom: $850
— Two-bed, one-bath: $946
— Two-bed, two bath: $1,035
— Three bedroom: $1,139
Rents in Colorado rose statewide in the first quarter of 2014, as job growth and housing demands continue to outpace new construction in many areas, according to the “Colorado Multi-Family Housing Vacancy & Rental Survey,” released recently by the Colorado Division of Housing.
According to the survey — conducted by Ron Throupe, a University of Denver professor, and Jennifer Von Stroh, of Colorado Economic and Management Associates — the statewide average rent hit a new first quarter high of $1,026, up 8 percent from $950 during the first quarter of 2013.
Rents increased during the first quarter despite a small uptick in vacancies statewide, according to the report. The vacancy rate during the first quarter of 2014 was 5.2 percent, up from 4.9 percent during the same period last year.
But Ryan McMaken, communications director and economist for the Colorado Division of Housing, said the modest increase wasn’t enough to drive down rents, possibly due to the larger trend of steadily decreasing vacancy rates since 2004.
In the last decade, Colorado has seen rental vacancies plummet from 11.2 percent during the first quarter of 2004 to 5.2 percent in 2014. The average rent has increased by about $250 during that time.
“We’re seeing some increased construction, but it’s really been contained to a few pocket markets on the Front Range,” McMaken said. “We’ve also experienced several years of employment stability, which has contributed to the rising interest in rentals, especially multi-family units, for couples and small families who aren’t quite ready to buy.”
However, “new construction has been at the high end of the market, so we haven’t seen rising vacancy rates filter down to the medium- and low-rent units yet.”
The first-quarter housing survey focused on the metro areas of Colorado Springs, Fort Collins, Grand Junction, Pueblo and Greeley. Due to budget cuts, the Housing Division doesn’t conduct its rural resort survey until the third quarter, McMaken said, but the report includes data going back to 2009.
According to that data, living in the mountains isn’t cheap. Summit County residents probably already knew that, but what they might not have known is Summit is the second most expensive place to live among comparable resort communities. Only Aspen is more expensive.
Third quarter 2013 data shows the average rent in Summit County was $994, outpacing neighboring Eagle County by an average of $2 and coming in significantly higher than Steamboat Springs, which had an average rent of $726. Aspen’s average rent in the third quarter of last year was $1,068.
Of the communities surveyed in the first quarter of 2014, only Fort Collins was comparable to rural resort communities with an average rent of $1,183.
Interestingly, rental averages in the mountains tend to drop a few dollars between the first and third quarters each year, that is, except for Summit County. Since 2009, the average rent in Summit County increased in the third quarter in three out of five years, with the biggest spike coming in 2012, according to the report.
Despite being out of the ordinary when compared with Aspen, Steamboat Springs and Eagle County, McMaken said higher average rents is not that uncommon in the third quarter when looking at the rest of the state.
“The third quarter is usually one of the highest in terms of rental averages,” McMaken said. “Whether you’re a college student or a parent of school-age children, people tend to move and get settled prior to the start of the school year.”
in Summit county?
McMaken said he thought proximity to the Front Range probably plays a big role in high rental rates in Summit County.
When looking at the secondary indicators, McMaken said foreclosures are down and home prices, refinance activity, demographics and employment all have remained stable, even after 2008 when the economy slumped.
“One thing that sets Summit County apart from other rural resort areas is that it is so close to Denver,” McMaken said. “People were still interested in Summit County even during the down economy. It’s easy to get to, so you’re never really going to see those surges in local vacancy rates.”
Stability in the local real estate market may be music to the ears of those who can afford to buy in Summit, but for renters like Evan Lemons the cost of living almost doesn’t make the views worth the effort.
Lemons, 31, a service advisor at Summit Ford in Silverthorne, moved to Summit with his girlfriend about seven months ago. A graduate of Marshall University and raised by successful parents and grandparents in Huntington, West Virginia, Evans said his automotive service industry wage had always afforded him a comfortable existence, until he landed in Summit County.
Over the years he’s lived in some exotic and highly sought after locales, including Boca Raton, Florida, and the Nashville suburb of Franklin, Tennessee, but he’s never paid so much for so little as he does in Summit County.
“Boca Raton was way cheaper by comparison and we’re talking about the Beverly Hills of Florida,” Lemons said. “I lived in a three bedroom house for $1,250, but you could also get a studio right on the beach for $500.”
Today, Lemons pays $950 per month for his 680-square-foot, one-bedroom apartment in Dillon. His rent of $950 per month also happens to be what he paid for a two-bedroom apartment in Franklin, which is famously popular among Nashville recording artists and is located in one of the top 10 wealthiest counties in the country.
But Lemons considers himself lucky to have his modest one-bed for two reasons. First, he arrived in December 2013, the early peak of the ski season, and second, he had never heard of landlords asking for lump payments of first and last months’ rent and a security deposit just to put a roof over his head.
“When I moved here it was a mess and I ended up dropping all of my savings,” Lemons said. “I’ve been looking at different apartments and found one the other day for $1,500 per month.
“Fifteen hundred dollars per month is one thing, but that’s $4,500 with first, last and security. Who has $4,500 in cold hard cash?”
But Breckenridge landlord Bob Chesnutt said it’s just as tough to make it in Summit County for lessors as it is for lessees. Chesnutt splits his time between Denver and Summit County, and 12 years ago bought a 1,500-square-foot, two-bedroom, two-bath home about 4 miles south of Breckenridge.
The property has a small ground-level apartment, where Chesnutt lives when he is in town. Long-term renters occupy the rest of the house at a rate of $1,900 per month, which accounts for about a $600 per month loss when factoring in his monthly mortgage payment, utilities, snow removal and other costs.
“I’ve been the youth hockey director for the last five years and I’ve always loved it out there, so it’s worth it to me,” Chesnutt said. “The price is set by the market and what I can get, not by what my mortgage is.”
Chesnutt is in a unique situation because he spends half of his time in Summit, living in a second home, or at least a part of it, but Lemons doesn’t think the majority of landlords are taking a hit on their rental properties. Rent is so high in Summit County because local landlords are greedy, he said.
“I lived in one of the wealthiest counties in the country, but that was old, deep-pocket money and everyone still treated you with respect,” Lemons said.
“This community should be taking care of its own and it’s not. I’m baffled by anyone who can afford to live here for more than a year because I’ve already contemplated leaving several times and I’ve only been here seven months. Then I look around at where I live. That’s the only thing that drives me to stay.”
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