Colorado apartment vacancy rates: Why are they so low?

According to just-released data compiled by the Colorado Division of Housing, the state's apartment vacancy rate is the lowest it's been in more than ten years. And, as this account from Inside Real Estate News points out, the rental market is particularly tight in Denver, with the average metro apartment now commanding $915 a month.

Did the state suddenly absorb an influx of roughnecks (shades of 1981!) looking for work in the oil patch? Did a whole generation of slackers simulataneously move out of their parents' basements? How else to explain the dip in apartment availability to levels not seen since before the September 11 attacks?

Actually, the figures are actually not as dramatic as they might first appear. The vacancy rates have been trending downward for some time, and that's probably a good news-bad news scenario, depending on who you talk to.

On one hand, the vigorous rental market around the state (and particularly the Front Range) suggests that demand is slightly ahead of supply and driving the average rent upwards -- a good deal for landlords everywhere. But it's also an indication of the continuing softness of the housing market in these parts. Home prices here haven't suffered the radical adjustment they have elsewhere. Foreclosures have dropped significantly and interest rates are moribund, but Denver still has more barriers for borrowers seeking home loans than some cities.

And, when trying to gauge the extent of home affordability in the area, it's helpful to look at the rent-to-mortgage payment ratio, a comparison of average rental rates to the mortgage payments involved in purchasing a median price home. By that yardstick, renting is still cheaper than buying -- and arguably a better value at the moment.

For a look at how this plays out in real time, check out this week's issue of Westword, which goes online Wednesday afternoon. My feature "Meet the Neighbors" examines several housing battles in one Denver neighborhood, including the impending arrival of a 42-unit apartment complex on what has been mostly a block of single-family homes. The developer calls the area "the hottest rental market in Denver" -- and that makes it hot, hot, hot.

More from our Follow That Story archive: "Carmelo Anthony loses $6 million on house sale: Hope he's happy in NYC (PHOTOS)."