Vacancy rates have a long way to go to get to pre-pandemic levels.
The rate of empty Denver metro apartments hit a historic low — 4.3% — in March 2022, according to a report from the Daniels College of Business at the University of Denver. With fewer apartments available, the cost of rent has gone up — way up.
Yet vacancies are rising again, according to new data from the online rental site Apartment List.
Looking at June last year to June 2022, the vacancy rate isn’t that different, according to Apartment List’s recent vacancy report. About 5.5% of apartments sit empty, down slightly from 5.7% last June.
So how many units are empty? In the metro area, there are 384,257 total rentable units, according to Colorado Apartment Association estimates. That means roughly 21,134 are currently vacant.
Nationally, things are tighter. Across the country, the vacancy rate is 4.95%.
And there are still significantly fewer homes on the market than there were before the pandemic, when vacant units hovered around 7%.
Rent, which dropped during the pandemic, has since grown a shocking 14.7% over the past year and continues to climb. As of May 2022, median rents in Denver were $1,483 for a one-bedroom apartment and $1,817 for a two-bedroom.
So what explains the hike in rent if more supply is hitting the market?
“Vacant apartments remain historically scarce, thereby providing property managers the leverage to rent to higher-paying customers,” explained Apartment List researcher Rob Warnock. “Prices have been rising steadily in Denver metro since the beginning of 2021, shortly after the vacancy rate began to plummet.”
Henry Eisler, a spokesperson for the Colorado Apartment Association, agreed that the lack of supply contributes to the price of rent but also said there are more factors driving costs of housing up.
“Metro Denver experienced its highest jump in consumer inflation in more than four decades during Q1 2022,” he said. “All this inflation also impacts the price of rent, as renovations, upkeep, utility and labor costs rise precipitously.”
While eviction rates returned to pre-pandemic levels in March, they have been lower than before the pandemic in every other month of 2022, according to Denver County Court data.
Those numbers do not reflect what could be higher numbers based on things that are not tracked, namely, threats and promises of eviction that do not lead to court filings but do force tenants out of their homes
Eviction rates might also be lower because the City and County of Denver offers eviction defense for people making less than 80% of the area median income. When given legal representation, a significant number of tenants going through the eviction process are able to stay in their homes.
Eisler said that rents will only decrease if there is more supply. The city simply needs more units to rent.
His organization is pushing for the city to pass developer-friendly policies to make new construction more affordable.
“In Q1, we delivered far fewer multifamily housing units than expected (just 1,936 new units added, a 69.18% decrease from Q4 2021),” he wrote. “If we continue to underdeliver multifamily housing, and Denver’s population of renters continues to grow, we’re going to see rent inflation. It’s time for a common-sense, supply-side policy response: development grants, tax credits, permit-fee reductions, rezoning.”