Based on the recent Denver Metro Apartment Vacancy and Rent report, apartment rents throughout Metro Denver begun to recover in the third quarter after the drastic drop during the pandemic’s earlier months.
Denver generally saw a $15.95 monthly increase in the average monthly rent prices that caused a rise from $1,505.71 by the end of June to $1521.66 at the start of October this year. This resulted in a $15.30 year-over-year change, and the median rent increased from $1,453.97 to $1,463.34 between the second and third quarters.
Analysts now claim that apart from the specific localized situation, these estimates contradict earlier concerns that the Denver apartment market was crashing due to the current pandemic’s effects.
Vacancy rates generally decreased throughout Colorado, with Denver reporting a 0.2% drop between the second and third quarter resulting in a 0.2% year-over-year decrease in vacancy rates. Denver Metro Apartment Vacancy and Rent report indicate 2,119 newly added apartments and 2,910 freshly occupied units in Denver during this period.
With the rising influx of individuals moving to Colorado from other states like California and New York, this is a sign that the Denver housing market isn’t saturated by new supply yet.
With the recent reinstatement of the extended eviction moratorium by the Center for Disease Control and Prevention (CDC) and Colorado governor, at least 5% of the property owners in this survey affirmed that their tenants had not paid their rent by the end of the third quarter.
Apartment application trends
Despite being plagued by rent declines, the end of year report by RentCafe indicates that Denver is still among the strongest apartment markets amid the pandemic due to its surge in rental applications.
Many renters preferred staying in their current apartments throughout the nation, meaning an overall drop in new apartment applications this year. Despite this increasingly popular preference throughout America, Denver saw an 11% year-over-year increase in its local rental applications.
As the 4th biggest gainers in apartment rent applications, Metro Denver had a 16% increase in apartment rent applications due to people moving in from other areas and ranked 3rdin this regard. The Mile High City also recorded a 14% year-over-year increase in local renters’ applications and ranked fourth nationally on that metric.
According to data gathered from this year’s rental applications in Denver, the typical applicant was 28 years old and earned an average income of $46,164. This information suggests that most of the applicants in Metro Denver held jobs that weren’t affected by layoffs during the pandemic.
Another report from Apartment List highlights that the city’s share of searches from people looking to move into Denver from elsewhere dropped by 0.5% from last year, with 17.4% showing interest in short-term leases.
At least 23% of Denver renters are house hunting for apartments elsewhere (preferably within Colorado), the report concludes.
The RentCafe survey report clearly outlines that high rental applications didn’t necessarily mean a rent increase. According to it, Denver’s median rent shrunk by 2.2% to $1,636 earlier this year, and Apartment List further projects a more significant yearly rent decline for the rest of 2020.
The new trend in apartment rent
According to rent reports from Apartment List, the pandemic is the main culprit behind the steady apartment rent declines throughout Denver this year. The current median monthly rent for a two-bedroom property in the Mile High City is $1,550, a 2% decline from a year ago.
Rental growth for other neighborhoods in Colorado seem to be softening quicker compared to Denver. Lone Tree apartment rents fell 1.35 to about 2,050, Arvada’s declined 1.25 to 1,420, and Englewood rents dropped 0.8% to $1580.
Other cities such as Aurora, Thornton, Parker, and Westminster recorded more than a 1% rise in rent increment this year, justifying analysts’ assumption that central cities are prone to steeper rent declines than suburban ones.
While Colorado generally recorded a 1.7% year-over-year median apartment rent decline, the national average fell 1.4% over the previous year.
Real estate experts further explain that the Denver metro had fewer incoming renters from elsewhere due to a blend of remote work and economic slowdown impacts compared to the other secondary cities.
Throughout the last decade, developers primarily focused on constructing high-end luxury apartments that were generally close to main attractions but less preferable during the pandemic because they are smaller.
Even though future developments might be a little sluggish at first, the need for more living space will be a key consideration moving forward. Contact our knowledgeable and amicable property managers now for more Denver housing market insights and customized real estate solutions.