The most dramatic statistics we have seen lately are in the rental marketplace. Our tracking of available rental units shows a high volatility. At one point in April there were almost 300% more available rentals on the market compared to April 2002. This appeared to be a bubble and the numbers for May were better. The numbers are still still up over 200% from this time last year.
This vacancy level is the result of a confluence of factors: low mortgage rates are enticing tenants to buy homes instead of renting; some renters who have lost their jobs have departed the area in search of new work; whole companies have closed divisions as part of cost-cutting measures and transferred workers to other parts of the nation. As a result, the competition for renters has become increasingly keen and rents are down. For a time, landlords were offering a wide variety of incentives to potential tenants, such as free rent, new televisions, DVD players, ski lift tickets, etc. (Boulder Daily Camera, March 16, 2003). Recently this trend has changed as many landlords and leasing agents have bypassed these incentives in favor of further reducing rents. Many existing tenants are now able to renegotiate their leases with reduced rent as landlords work to avoid losing rent.
Credit, criminal background, employment and reference checks have become increasingly important as tenants move within the market. This is a very valuable indicator of the reliability of a potential tenant as some tenants move without notice to gain reductions in rents.
Bottom line: it is a very challenging market but there are good, qualified renters out looking right now. They are becoming increasingly savvy about rent levels and price is the most important factor in avoiding vacancies.
