For two months in a row, Denver has ranked in the country’s top ten cities for the largest rise in rental rates of one bedroom apartments. For even the most experienced property manager Denver employs, it may have been somewhat surprising considering vacancy rates have been rising and rental rates falling for most of the year. According to the national apartment finding service, Adobo, Denver encountered a 3.1% rise in the median price of a one bedroom apartment for December 2017, which placed the city at number six on the list. The November statistics had Denver in 3rd place, the first time it’s appeared on the monthly list since its inception in 2015. Here is a list of three reasons this change is occurring.
Denver has added almost 10,000 apartments to the market in the first three quarters of this year. And while this would intuitively lead to an increase in vacancies and a corresponding decrease in rental rates, the fact is that brand new apartments can command a higher rate than older buildings. New luxury apartments must also be taken into account when they become available for rent, as their higher rates have a greater effect on median prices.
It has been found that a lot more boomer aged residents are renting in the city which is partially responsible for the increase in urban construction this year. Downtown dwellers have traditionally been younger students or new career types while the older generations migrated towards the suburbs. But this trend has now reversed with many older people being attracted to short commutes and the benefits of walking.
The 2008 housing crash has had long lasting effects and one of the major consequences has been that people are more reluctant to commit to buying property and end up renting instead. Add to that the uncertain futures experienced by millennials who don’t have secure, high paying jobs and you end up with more renters than buyers.
While it’s impossible to predict the future, there is definitely a trend of more apartments being built. It’s expected there will be more this year than there have been in the past 30 years. The rental climate will be changing and the services of companies such as Woodruff Real Estate And Property Management will become even more valuable.