Colorado Springs, Colorado 2021-08-03 03:59:29 –
“Vacancy in Denver Metro Apartment and” Rental “report from Daniels Business College at the University of Denver.
Apartment vacancy rates in the region plummeted from 5.5% in the first quarter to 3.7% in the second quarter. This is the toughest rate in the local apartment market since the third quarter of 1999, when the dot-com boom soared.
“This is awesome, it’s like what’s happening here. At this point, the system isn’t loose,” said Ronsloop, an associate professor of real estate at the Daniels College of Business and author of the report. increase.
Although not the lowest ever, vacancy rates are now at the “friction” rate, the pace at which units are swapped. As soon as the apartment opens, they are claimed, and it offers landlords who are struggling with months of payment failures or partial payments the opportunity to order higher rents.
Median or median rents increased from $ 1,483.28 in the first quarter to $ 1,579.93 in the second quarter, up $ 96.65 (6.5%) in just three months. Annual profits, including pandemic soft patches, are $ 125.96 or 8.5%.
Average rents rose from $ 1,543.59 to $ 1,651.44 between the first and second quarters, a record increase of 6.99% quarterly. If that pace continues for more than three-quarters, that’s unlikely, but rents will rise by nearly 28% annually.
Another indicator of how the Metro Denver market turned upside down in the second quarter is absorption. New tenants claimed a huge 10,298 units in the quarter, as opposed to just 8,195 units absorbed last year. In the boom of 2018, tenants claimed 13,708 units in 12 months.
Despite the shortage of materials and the difficulty of finding workers, the construction of new apartments is proceeding at the same pace as the previous year. Developers added 2,495 units this quarter. This is the same thing we have done in recent years.
We’ve seen a surge in available units, even in markets that have become excessive during the pandemic, such as downtown Denver and Boulder. Vacancy rates in downtown Denver plummeted from the pandemic high of 10.9% in the first quarter to 5.3% in the second quarter. Meanwhile, the vacancy rate in Boulder has risen from 10.2% to 5.5%, excluding the neighborhood of the university.
So why did the apartment market get so tight so quickly? As vaccination became more widespread and the economy resumed, young adults who returned with their families and high school and college graduates who delayed their first place came back.
Rising prices and lack of inventory in both new and existing homes also seem to have forced some lessors who wanted to own a home to look for and renew their debt. Difficult to quantify, but the federal peasant eviction moratorium and availability of rental assistance funds, which expired on July 31, determine some lessors who may have moved in other ways. It may stay in position. Additional demand could come from more people moving here, such as remote workers who don’t have to report to the office every day.
According to the report, landlords see the share of rent lost due to delinquency, bad debt and concessions jumping from 7.9% overall in the first quarter to 11.6% in the second quarter. They may be trying to recoup their pandemic losses by charging higher rents in the future. This is what the constrained market allows them.
Throupe said the dramatic changes seen in the second quarter may continue into the third quarter, but he called it a post-pandemic “realignment” rather than a new trend.
Denver apartment rents jump as vacancy rates plunge Source link Denver apartment rents jump as vacancy rates plunge