via The Denver Gazette

By Bernadette Berdychowski | Published on October 23, 2024

With the flood of apartments being built across the metro Denver region, Apartment Insights researcher Cary Bruteig said he was initially concerned there wouldn’t be enough residents to move into them.

But that hasn’t been the case. Renters are keeping pace.

“We opened almost a record 21,000 units,” Bruteig said. “But we filled almost all of them up.”

Over the last 12 months, the Denver metro region added nearly 21,160 new apartment units. For the same time, according to a report released Wednesday from the Apartment Association of Metro Denver, there were about 20,400 new leases signed.

The absorption is almost double what it was several years ago, Brutieg said. In the early 2010s, Denver’s absorption spiked to about 10,000 units leased a year.

“I'm just happy that we have this many new apartments for them to move into and still have a 5% vacancy,” Brutieg said.

Vacancy fell to 5.3% in the third quarter, the report found, down from 5.6%.

Rents have remained fairly flat since 2022. The median rent increased by $1 to $1,820 from the previous quarter, the report found.

The rent increases are “well below” inflation, Bruteig said. “So in real numbers, our rents are actually going down.”

The region is undergoing a peaking apartment boom, as the number of new units built is the highest since the local association began collecting data more than 44 years ago. The boom is expected to slow down as building permits have dropped across the region.

“The rental market is performing remarkably well considering the avalanche of new supply,” the quarterly apartment report said.

While flat rents and plenty of choice are good news for renters, there may be a dark side to this trend.

The surge can be partly explained by the fact more people are stuck in the rental market, Bruteig said.

Just like with apartments, the housing market has seen a surge of new inventory, according to the Denver Metro Association of Realtors. The region had more than 11,000 active listings at the end of September, a high not seen in more than a decade.

But unlike the rental market, buyers aren’t biting.

The number of closed sales fell 19% over the last year, despite inventory climbing 45%.

Most homes sold for more than $576,000 in September.

“The pricing for new single family homes is just out of the reach of so many people,” Bruteig said. “Their only alternative is to rent.”

Drew Hamrick, the apartment association’s senior vice president for government affairs and general counsel, said Colorado’s policies have kept developers from building popular starter homes such as condominiums and townhomes.

It’s kept many people in the Denver metro region stuck with renting, he said.

If there’s any adjustments to state policy he’d like to see the most, Hamrick said it would be to make it easier for developers to build more condos and townhomes.

And Hamrick said he knows those are large competitors for apartments, but added the low number of multifamily housing for sale across Colorado is “abnormal.”

“We are building enough apartment units to keep up with demand precisely because that segment of the economy has been made to not function,” Hamrick said. “We need to fix that.”