Paying through your nose was commonplace in bustling cities like San Francisco and New York. These days, the comparatively quieter city of Denver is witnessing skyrocketing rents. The crunch in rental affordability began towards the end of the housing boom when owning a house was easier than paying rent. The Denver rental market began to explode around 2002 when a two-bedroom apartment near downtown was rented out from $1200 to $2000. The city was almost re-discovered in the aftermath of the recession and jobs made hundreds and thousands flock to Denver. This led to the astounding rise in rents. According to Zillow, Denver is the third most expensive city to live in after San Jose and San Francisco, by way of rent.
According to DenverInfill blog, developers will have have constructed almost 11,000 apartments between 2010 and 2016 within 1.5 miles of the city of Denver. Around 96% of these units are rented out. Tenants are paying more for less. For the smallest apartment with an area of only 330 square feet, rents can go up to $1000 a month. It is surprising how even two-earner families with steady and high incomes are not moving up to luxury houses or condos, thus pushing down rents and providing relief to people with low and middle-range incomes.
The vicious cycle behind the spiralling-out-of-control rents in Denver can be attributed to the fact that high rents are making it harder for tenants to save for their down payment, thus making it impossible for them to buy houses and relieve pressure on the rental market. Low vacancy in rental units are making landlords increase the rents. Developers aware of the rental prices are more interested to buy developable land to construct buildings and rent them out at higher prices. Some people blame the insane increase in rents to legalization of pot (for both medicinal and recreation purposes). They believe that more money in some hands and the flocking of people from all over the country to reap the benefits of legal marijuana are raising rents.
Good news and relief are, however, on the way. Experts say the Denver rental market is showing signs of slowing down after many months of blinded, unbridled growth. Rental units have resumed offering discounts to prospective tenants, especially in neighborhoods with more new construction. The rental market will not stabilize and slow down overnight. It will take a year or two to make the impact visible, but the signs are encouraging. Vacancy rates are also indicative of the change that is in the air. In the Denver metro area, including units that are in the leasing phase, the vacancy rates are up to 8.9% from 7.9% last year say local property management firms.
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