The statewide apartment vacancy rate in the fourth quarter of 2008 increased to 8 percent, driven by increases in vacancies in Greeley, Grand Junction, Loveland and metro Denver, according to a report released today by the Colorado Division of Housing.

That is a 21 percent increase from 6.6 percent a year earlier.

Vacancies also rose from 2008’s third-quarter vacancy rate of 6.6 percent, although vacancies are generally expected to rise from the third quarter to the fourth for seasonal reasons.

Rates were stable in Pueblo, where vacancies increased from 7.1 percent during the fourth quarter of 2007 to 7.2 percent during the fourth quarter of 2008. Only Colorado Springs and Fort Collins experienced falling vacancies during the fourth quarter, with Colorado Springs falling from 10.8 percent to 10.4 percent year over year. Fort Collins vacancies fell from 4.4 percent to 4.2 percent during the same period. The fourth-quarter survey measures only vacancies in metropolitan areas of the state.

Metro Denver’s vacancy rate, reported in a separate report earlier this quarter, rose 30 percent from 6.1 percent during the fourth quarter of 2007 to 7.9 percent during the fourth quarter of 2008. Increases were smaller in northern Colorado, where Greeley vacancies advanced from 7.2 percent to 8.1 percent year over year, and Loveland vacancies rose from 5.6 percent to 6.1 percent during the same period.

In general, a vacancy rate of 5 percent is considered an “equilibrium rate.” Rates below 5 percent indicate a tight market.

“The trend in recent quarters has been toward rising vacancies due to softness in the housing market and in the overall economy,” said Kathi Williams, director of the Colorado Division of Housing. “Looking at the nation as a whole, Colorado is certainly one of the stronger multifamily markets, but we’re not immune from the national economy.”

In spite of falling vacancy rates in much of the state, average rents continued to increase throughout the fourth quarter of 2008.

Average rents increased in all areas surveyed except Loveland and Greeley.

The most substantial rental increases were found in Grand Junction and Pueblo, where average rents jumped 10 percent in each area from the fourth quarter of 2007 to the fourth quarter of 2008. Year over year, Grand Junction rents increased to $666.22 from $603.22, while Pueblo average rents increased to $518.26 from $470.65.

Loveland rents fell from $862.32 to $850.92 from the fourth quarter of 2007 to the fourth quarter of 2008. Greeley rents were more stable, falling from $631.19 to $628.77 during the same period.

“In most places where you see significant rental increases, with the exception of Grand Junction, you’ll find that the average is being driven up by recent new construction,” said University of Denver business professor Gordon Von Stroh, who wrote the report. “New units command higher rents, and it is not necessarily the case that there is much rent growth in older units.”

The vacancy and rent surveys are provided by the Colorado Division of Housing to renters and the multifamily housing industry every quarter. The report is available online at the Division of Housing Web site: http://dola.colorado.gov/cdh/vacancy/index.htm.