Q3 report reveals state of Denver's apartment rental market
Great article from the Denver Business Journal
The Denver metro's apartment rental market remains stable with flat rates, slightly lower vacancy and an increase in new units, according to the Q3 Denver Metro Area Apartment Vacancy and Rent Survey, which is conducted by the University of Denver’s Daniels College of Business and Colorado Economic Management Associates and published by the Apartment Association of Metro Denver.
Average rent in the third quarter was up roughly 1% from a year prior to $1,522, while median rent was up a little more than half a percent to $1,463.
“This report shows a stable rental economy despite the impacts of the pandemic,” said Mark Williams, executive vice president of the Apartment Association of Metro Denver. “Renters can find comfort in flat rental rates, lowered price per square feet and additional benefits that lead to lower effective monthly housing costs, especially considering consumer prices are increasing and the job market remains volatile at this time.”
The flat rental rates also contrast sharply with rising prices for single-family homes amid a tight housing market. The median closing price for a detached single-family home in the 11-county metro in September was $510,000, a 13.33% increase from a year ago, according to the latest monthly report from the Denver Metro Association of Realtors.
Apartment vacancy dropped to 4.9% from 5.1% in the third quarter, now standing only 0.2 percentage points higher than a year ago. The Denver metro apartment market added 2,119 new units in the third quarter, with net absorption of 2,910 units.
“These results negate the concern of an apartment market crashing because of Covid-19 effects, albeit certain localized situations are likely,” said report author Ron Throupe, associate professor of real estate at the Daniels College of Business.
Rent delinquency remains low, with the majority of respondents to the survey reporting that less than 5% of their tenants were not paying rent. However, the number of communities experiencing between 5% and 9.99% non-payment increased from April to August, and the number of communities experiencing greater than 10% non-payment is also slowly increasing, according to the report.
In a sign of the times, a release accompanying the report notes that due to Covid-19-related budget cuts, the Colorado Department of Housing, which is the report's main sponsor, will no longer be able to sponsor the Denver report as well as the Colorado Springs and statewide reports.
"Many organizations use this report quarterly within their reporting and baseline trends," the release from the University of Denver's Daniels College of Business states. "However, it is not financially viable to continue to produce the report, and unless one or more new sponsors is secured, this could be the final issue."
Colorado's rent collection percentage as of Oct. 20 was 94.3%, according to data analytics firm RealPage and a member survey conducted by the Colorado Apartment Association. That percentage is roughly in line with previous months, when rent collection rates have hovered around the mid-90s.
There were 957 eviction filings throughout the state during October as of the 22nd of the month, 36% of the typical monthly total, which was 2,655 in October 2019.
On Oct. 15, Gov. Jared Polis signed an executive order that prohibits landlords from charging late fees and penalties on rent due through Dec. 31. The order also requires landlords to notify tenants of the federal protections against eviction created by the Centers for Disease Control and Prevention and extends a mandate that landlords must give tenants 30 days to get up-to-date on rent before initiating eviction proceedings.
Drew Hamrick, general counsel and senior vice president of government affairs for the Colorado Apartment Association, called the effective eviction moratorium "a substantial move backwards."
"By preventing a property owner from getting their property back at the expiration of a lease or if there’s a default, the ability to rent a property is being destroyed," Hamrick said in a statement. "The result of the continued changes in executive orders will make it more expensive to attain rental housing.”
