Rental Options Limited
My friend Katie has been looking for a place to rent. It’s not been easy. “Today I’m going to drive around the DU / Wash Park areas. I’ve not been down there in a week.”
She’s looked at 20 to 25 houses so far, half were not what she had expected after finding them online. Out of those, she’s filled out 10 applications—she’s not heard back from any of them. “I’ve offered a retainer of $400 cash for some places we felt were worth it, calling it a non-refundable cash offer or even offering to pay an extra $100 a month.”
With a clean rental history, no late payments, no evictions with a long standing job, she’s the kind of person you would want to rent to. But still, no call backs. “Pretty disheartening.”
While housing rates plummeted when the housing bubble burst, many people still don’t feel very comfortable buying. Banks also continue to make it harder to borrow and many first time buyers remain leery. Delays in processing foreclosures while federal regulators, state attorneys general and banks review how those foreclosures were carried out leave empty homes unavailable to buyers. Many find renting a bit safer still and in some cases, cheaper. While homes in foreclosure sell at a 20 percent discount on average, new buyers remain circumspect over the wait and continue to rent.
Denver Rental Market Saturated
Many current home owners have decided to pull their homes off the dwindling and declining markets and simply wait it out by renting till the housing market gets back on its feet. And with the current flooding disaster, many homeowners are now in need of a place to rent. Seventeen counties and 2,000 square miles were affected by the floods, including an estimated 17,500 homes were damaged. Sadly, only one percent of Coloradoans had flood insurance. This means many of those homeowners will not be able to buy another home any time soon and will have to become renters, flooding the renters market for a few long years to come.
For people like my friend Katie, this isn’t good news. “Since the flood I think that people are more likely to rent to people who have been displaced, and I don’t blame them for that and can’t be too upset about that, but I need a house too. I’ve been looking for months.”
Prices Rise with Low Supply and High Demand
But there’s even more bad news. Apartments in Denver are in high-demand while vacancy rates for metro Denver is at its lowest since 2000 with rates increased by 4.3 percent over the past year. The average rent today is just over $1,000. Denver has had the third highest rent increase in the nation. While we continue to weather the Great Recession fairly well, with a decreasing already low unemployment, more people continue to migrate in an already rental saturated city looking for work. Job seekers in their twenties and thirties aren’t quite ready to buy a house and will rent instead.
Without many new apartments being built under the construction slump, the inventory for the Denver rental market continues to decrease and their prices will continue to increase. As we move from under the construction slump rental spaces will continue to lag for another 18 to 24 months.
While the situation isn’t exactly critical, for people like my friend Katie, time and money are getting tighter. “We’ve raised our budget and are now extending our search to apartments. I’m sure we’ll find something.”
New Era Realty has many properties available to those ready to step out of the renter’s market and this might be a good time to do so.