Vacancy Rates Drop

The aftershocks of the busted housing market has helped vacancy rates in Fort Collins drop to 5 percent from 8 percent over the past year.

According to the Colorado Multi-Family Housing Vacancy & Rent Study for the third quarter, released by Colorado Division of Housing, the rental market in Fort Collins has improved, at least for property owners.

In Fort Collins, the average rent for the third quarter is $757.17

Most of the state experienced similar drops in vacancy rates, save for Greeley.

Greeley's rate still hovers around 8 percent, a 1 percent increase from this time last year. The city's average rent, according to the report, is $622, a slight increase from last year.

While the report doesn't give any explanation behind the drop, one property manager has a theory.

Sherry Jeffcoat, managing broker and owner of Legend Property Management, said Fort Collins' vacancy rate decrease can be attributed to people who have either lost or had to sell their homes and re-enter the rental market.

“There are a lot of people who have lost their homes because of foreclosures and they have to have a place to live somewhere,” Jeffcoat said.

She said she has 10 families with similar situations living in her properties.

Most of these people in general have great credit, minus the foreclosure blemish, Jeffcoat said. They also have well-paying jobs and pay up to a year of rent up front.

Another contribution to the vacancy rate decline is Fort Collins' restriction on new construction of multi-family units, Jeffcoat said.

“They have stopped building; they are going to Loveland to build,” she said.

While current market factors are increasing rent for people, they are good news for property managers and owners.

Out of the 90 properties, Jeffcoat only has four that are vacant.

“Before, you had to give property away,” she said, when the vacancy rate in Fort Collins was in double digits about three years ago.

When there was that glut in the rental market, bedroom rates were around $300 per month.

Jeffcoat thinks rental units are still under-priced but believes the market is going to improve in 2008.

“In another year, prices will be at an appropriate amount,” she said.

But now, property owners are still facing an upside down situation; where property mortgages remain higher than the rent collected.

“The rental market is going to get tighter and rent is going to increase because of that because it can,” she said.