MARKET OVERVIEW
Metro Denver Apartment Market Sees Increasing Demand , Low Vacancy
Last month , the Apartment Association of Metro Denver ( AAMD ) released 2022 first quarter results from the Denver Metro Area Apartment Vacancy and Rent Survey , conducted by the University of Denver ’ s Daniels College of Business and Colorado Economic Management Associates .
The metro Denver apartment vacancy rate remains historically low at 4.3 %, a 21.82 % year-over-year decrease from Q1 2021 . Metro Denver ’ s continually low vacancy rates are both a positive and negative indicator for the health of the city ’ s rental market . Low vacancy should inspire some confidence , as it indicates strong demand , a steady cash flow for rental housing providers and strong rental housing security for residents . It also indicates a severe need for housing development , as demand for rental housing continued to outpace new construction during Q1 2022 .
“ We need to continue to make progress on delivering new apartments quickly ,” said Mark Williams , executive vice president of the Apartment Association of Metro Denver , “ if we don ’ t make a serious investment in allowing for new development , demand pressures will continue to strain Denver ’ s rental housing market .”
The report shows a 3.3 % quarterly increase in rent , with an average rent price in metro Denver of $ 1,765 . The year-over-year increase is 14.4 %, with an average cost of $ 2.06 per square foot . Though high , Denver ’ s rising rent rates are not a local condition , as major metropolitan areas across the country have similar pricing trends . Rent prices continue to be a function of supply and demand , and if supply and demand don ’ t increase proportionally , prices will continue to rise .
While rent prices remain high , year-over-year growth sits at a fraction of the price increases experienced by the local housing market . Over the last year , the average price of a single-family home in metro Denver increased by more than 20 %. After Q1 2022 , multifamily residential remains the densest , most sustainable and most affordable housing option for Denver residents .
“ Across metro Denver , we ’ re seeing a record number of applications for rental housing , and we don ’ t have enough units to meet that demand ,” explained Drew Hamrick , senior vice president for government affairs and general counsel for the Apartment Association of Metro Denver . “ The key to housing affordability is housing supply . We need to incentivize new development through sensible , pro-building policies , like tax credits , development grants and permit-fee reductions . If we don ’ t increase our rate of construction , prices will continue to rise .”
As of Q1 2022 , there are 384,257 total rental units in metro Denver . Across the first quarter , just 1,936 new units were added , a 69.18 % decrease from Q4 2021 . The construction of new high-density residential developments remains the solution to Colorado ’ s housing shortage and affordability issues . Going forward , Denver and the surrounding suburbs must increase the speed at which developers obtain zoning approvals , and they should avoid adding additional barriers to building , like affordable housing requirements , rent control and new permitting fees .
The Denver Area Apartment Vacancy and Rent Survey reports median and average rates , and , as a result , there are often differences in rental and vacancy rates by apartment type , size , location and age of building / complex . These variances have become more pronounced as the vacancy rate has fluctuated over the last several years . All information is based on data received for the month of April , apart from resident turnover and rental loss data , which is for March 2021 . www . aamdhq . org MAY 2022 TRENDS | 29