I’m not in the prediction game, but every once in a while it feels like the universe just dumps a bunch of wet tea leaves in your lap. Let’s sort through them.
“Rent is falling!”
So recently, headlines seem to suggest that rents in Denver are going down. All these bits of information have come out within the past few months.
- Factoid: The average rent for a Denver apartment fell from $1,371 in the second quarter to $1,368 in the third quarter, according to a new report from the Apartment Association of Metro Denver.
The Apartment Association of Metro Denver conducts a survey of rents to place with certificates of occupancy. So this group is much better equipped to control other rental estimating issues like only looking at units currently available to rent or a selection bias.
Their average rent is a little different from others that I’ve seen, though — instead of choosing a representative rental size like average one-bedroom rent, the average is a literal average of everything: one-bedrooms, two-bedrooms, everything.
- Factoid: Denver fell two spots in Zumper’s rental map, “slipping out of the top twenty most expensive rental markets for the first time in a while,” the site notes.
OK, first, this doesn’t correlate to a decrease in your rent. It’s just saying that relative to the rest of the United States, we’re not quite as expensive as we once were.
But Zumper does find that rents are decreasing on the whole, with the exception of studios.
Even then, Zumper “skews toward a younger and wealthier demographic,” DataLens D.C. notes. Here in Denver, you can see that there aren’t many rental listings in parts of West Denver, Globeville or Elyria-Swansea.
Others say rents are merely stationary
None of these rental reports are ironclad indications of reality because they rely on their own listings and methodology. Apartment List, for its part found that rents are merely stationary.
- Their factoid: “Rent prices in Denver stayed flat over the past month and are up 3.2% over last year.”
There are also more rent discounts happening
Sick of different percents rising and falling rents? How about this for something a little different:
Say you are a landlord, you list your property online, but no one wants it. Eventually, you will cut the price if you want someone to rent your place. Trulia measured the price cuts that happened on its site.
So far, 18.9 percent of rentals in the city had a price cut. That’s 5.3 percent more than last year, which in turn, puts Denver in the top 10 markets where rental listings have become increasingly discounted.
Verdict: maybe we’ve reached the top for a little while
“Maybe? A little while?!” you groan at your screen. Yes, sorry, but I did say I’m not in the prediction game.
At minimum, I think the next few months won’t see significant rent increases. For one, we’re entering winter, and that’s traditionally not a good time for landlords and sellers.
The crush of new people coming to Denver is slowing as well, suggesting that demand won’t surge beyond where it’s already been. Add to that the growing suspicion that millennials are going to start buying homes, and I’d further posit that demand can’t keep rising.
Why won’t rents decline then? Well, generally speaking, some research suggests that rents don’t fall unless the economy tanks or a ton of new housing becomes available. Neither seems to be happening — reports seem to be sunny and housing is relatively scarce, especially affordable housing.