This newsletter is a compilation of news and information regarding the rental markets in Boulder and Broomfield counties and the economic status of and outlook for the area. It is issued during the first week of the month. The sources for the data include local and regional news media, association publications and seminars, and information gathered from contacts in the property management and real estate fields. We make every effort to cite all of our sources. Should we miss one please let us know so that we can correct the omission.

Company News

Personalized Management Services has a new website, with lots of new functionality. The address remains the same - please check it out at www.persmgt.com

In other company news, Kathy Foster-Patton will join the Louisville Chamber of Commerce Board of Directors in December. Congratulations, Kathy!

National Economic News

On the national front, the stock market advanced strongly in October, surging upward in tandem with strong economic and earnings reports. The Labor Department reported that layoffs are slowing, while solid retail sales reports from Walmart and Gap contributed to the positive outlook. IBM's positive third quarter earnings release fueled the stock market even higher. (The Denver Post, October 10, 2003, October 16, 2003)

Apartment vacancies in the West declined, signaling a reverse in the upward trend for next year. Rents continued to lag inflation in the third quarter but analysts predicted a upward movement next year. September vacancies declined from June levels everywhere in the West but Arizona and dropped by at least a full percentage point in 13 of 19 markets. A study interpreted the statistics as a positive economic indicator, because people are reluctant to sign leases if their employment prospects are in jeopardy. (The Denver Post, October 17, 2003)

The Commerce Department reported that home building jumped in September at the second highest rate since 1986, attributed to low mortgage rates and construction companies working to fill backlogs. (The Denver Post, October 18, 2003)

Regional Economic Picture

Colorado is finally seeing some positive news on the jobs and economic fronts. Layoffs decreased in the third quarter and some indication of hiring emerged in the retail and healthcare arenas. This follows two consecutive years of job losses. (Denver Post, October 2, 2003) The Colorado jobless rate declined from 5.7 percent in August to 5.6 percent in September, the lowest rate since last February. 138,800 Coloradoans were looking but unable to find work in September. (The Denver Post, October 22, 2003)

In a sure example of how one economic condition leads to another, metro-area foreclosures jumped more than 46% from over a year ago. Experts attribute the rise to job losses and lax credit standards that allowed people to over extend. Further, bankruptcy filings in the state are on track for a record year, with 19,480 cases to date this year, compared to 15,686 over the same period last year. The increase of 24% puts the state on track to break the record it set last year of 21,216 filings. (Denver Post, October 2, 2003)

Denver's apartment vacancy rate dropped for the first time since late 2000, primarily due to concessions: steep discounts on rents. The market continues to belong to the renters. Boulder/Broomfield Counties reported a 7.1 percent vacancy rate with rents averaging $864 for one bedroom properties, $1032 for two bedrooms, one bath and $1,085 for two bedrooms, two baths. (The Denver Post, October 31, 2003)

Xcel Energy prices continue to rise. On top of a 73% increase in the heating portion of energy bills, the company requested a 2.5% increase in electric rates to take affect in March 2004. This follows an electrical hike last June. (Rocky Mountain News, October 4, 2003) Denver area home prices are up compared to a year ago, but many brokers say that the market is starting to struggle. Homes priced over $200,000 are sitting on the market and brokers believe that sellers are coming down sharply in order to save the equity they may have in a property. (Denver Post, October 29, 2003) The bottom line is the Denver metro area is behind the rest of the nation in terms of economic recovery. There are many positive signals, but Colorado has a long way to go.

At the risk of sounding like a broken record the market is still very challenging. As you can see from the chart there is a higher than normal number of rental properties still on the market.

However, there are signs of improvement. Several of the markets around the area are showing decreases in the vacancy rates according to Dr. Gordon Von Stroh at the University of Denver. He tracks vacancy rates around the area. He says the one of the biggest impacts was to student rentals in Boulder this year. Some of his early numbers were showing student rental vacancy rates were up from about 6% to 10% this season. Initial responses from the students show they were looking at the new CU apartments and less expensive rents a little further from campus. The final numbers are not in but it will be interesting to see how these apartments will affect the overall market. CU is continuing construction and will eventually bring another 1,000 beds to the market. They are also talking about adding married student and faculty houseing in the same area.

We are still getting calls from people looking for rentals. However, they still have a large number of available properties from which to choose. They are now looking at the actual rents rather than other incentives. This is continuing to apply downward pressure on the overall rents in the area.

If the other economic indicators continue to rise we expect to see the rental market stabilize or even improve.

City of Boulder: Amnesty for Unlicensed Rental Properties

The amnesty period for unlicensed rental properties continues through the end of 2003. The City of Boulder requires that all rental properties within the city limits have a rental license. The penalty for failing to license a property is $2,000 per violation and up to 90 days in jail. To take advantage of the amnesty program, a property owner should apply to the city and license their rental property. The licensing program requires a safety inspection by a qualified inspector. The City of Boulder Rental License office can provide details at 303-441-3152.

City of Boulder: Interest on Security Deposits

The newly elected Boulder City Council will consider this issue that the Boulder County Apartment Association continues to keep on the front burner. This is the language that the BCAA supports:

"Interest rates paid upon the refund of security deposits shall be determined by the city manager by averaging the interest rates being paid on one-year certificates of deposit by three banks doing business within the city that, in the view of the manager, provide indicia of being significant participants in the local banking industry. This average interest rate will be calculated as of December 15 of each year, or, if that date falls on a weekend or holiday, the first business day thereafter. The manager's determination of the rate shall be final. The rate shall be published in a newspaper of general circulation or posted on a city internet site that is accessible to members of the general public. The average interest rate so determined shall be rounded to no more than two decimal points. It shall become the rate of interest paid on any security deposit that is refunded during the calendar year starting on January 1 of the year immediately following the date of the manager's determination."

City of Boulder Fire Codes

The City of Boulder has adopted the 2003 International Fire Codes. There are two rules which may be of interest to some of our readers. The first one states that open flame cooking devices may not be operated on combustible balconies or within 10 feet of combustible construction. Exceptions are one and two family dwellings, and where buildings, balconies and decks are protected by an automatic sprinkler system. The second rule requies that liquified-petroleum-gas burners having a gas container with a water capacity greater than 2.5 pounds may not be located on combustible balconies or within 10 feet of combustible construction. Exceptions are one and two family dwellings.

Send us your questions and referrals

What is a competitive rent for your property? There is no one answer for everyone. We will be working with each of our clients to determine how their property should be priced in this market. Please contact us if you have specific questions or want more information.

We are actively working to grow the business and to add new properties to our management inventory. If you know someone that would be interested in our services please send them our way. We pay referral fees to anyone referring us business! That wraps things up for this month. Again, if you do not want to receive these messages please call or email us and we will take you off this mailing list.

Please take care!

Ray, Scott, Kathy, Kim and Frank