AURORA | Tales of distraught would-be homeowners unable to snatch a dream home in Colorado’s scorching-hot housing market are more common these days than a weed shop on Colfax.
But folks pining for that 30-year mortgage aren’t the only ones being squeezed ever-tighter by the state’s housing market.
Renters in metro Denver feel that pinch just as acutely.
Average rents across the metro climbed to $1,420 from $1,383 between the first and second quarter of 2017, according to the Denver Metro Area Apartment Vacancy and Rent Report released this month.
And, the report said, vacancy dipped to an even 5 percent, down from 5.7 percent in the first quarter.
Teo Nicolais, a real estate instructor at the Harvard Extension School and volunteer at the apartment association, said the state’s housing market has seen “unprecedented growth and unprecedented demand” in recent years.
But, experts say, there has been some relief as landlords dish out a variety of discounts aimed at blunting those ever-rising rents and luring savvy renters always looking for a deal.
The report said average discounts and concessions reached $102 per month in the second quarter of 2017.
Nicolais said the bulk of those concessions come in the form of a free month of rent spread over the course of a lease. That means if you sign a one-year lease for $1,200 a month and the landlord offers one free month, you pay only $1,100 each month.
And the concessions aren’t limited to a free month, Nicolais said. Some landlords have offered free parking passes or discounts on pet deposit fees.
With rents rising and vacancies dropping, the market would seem to favor landlords such that concessions would seem unnecessary.
But Nicolais said the market is more complicated than that. Last year saw a record number of new apartments built across the metro, he said, and 2017 is on pace to smash that record by more than 25 percent.
That means lots of inventory out there and landlords eager to fill brand-new buildings that are usually empty the moment construction wraps.
“If the property down the street from you is offering one month’s free rent, you need to offer it too,” he said.
As for rents, a spike in the spring is common, experts say.
“For eight consecutive years the second quarter has higher rents than the first quarter with a new peak each year,” Jerry Kendall, Senior Managing Director of Multifamily Capital Advisors, said in a statement announcing the report. “Some might say the apartment market defies gravity based on new supply coming to the market, but the key here is that new units have not drawn down occupancy on existing inventory. Why? Because job growth and household formation has continued to be robust with Colorado having the lowest unemployment in the country at 2.3 percent.”
And with the area’s employment scene thriving, experts say the rental market will continue to boom.
“When you look at the fundamentals of Denver it’s no surprise that the strong absorption continues in the apartment market. The in-migration is not slowing down and the extremely low unemployment is fueling wage growth that helping support the luxury market,” Terrance Hunt, Vice Chairman of ARA, a Newmark Company, in Denver, said in the statement. “New properties from the suburbs to the urban core are seeing strong lease up velocity. The Denver apartment market continues to attract new national and international investors and is seen as one of the top markets in the world to invest in.”