Rent is up in Denver – But not as much as Colorado Springs
Metro Denver rents continued to rise in July, climbing 0.2 percent from the month before and increasing 3.2 percent from July of 2015. But the increase seems tiny compared to the run up in Colorado Springs, where rents are up 10.4 percent from last year, according to Apartment List.
Colorado Springs rents jumped the most in the nation, with Seattle, up 8.4 percent, Reno, Nev., rising 8.3, and Vancouver, Wash., at 8.2 percent, not too far behind.
In this June 29, 2016 photo, new apartment buildings line a street in trendy downtown Denver. In this June 29, 2016 photo, new apartment buildings line a street in trendy downtown Denver. Brennan Linsley, The Associated Press Nationwide, median rent was up 2.1 percent. The national median is $1,300 for a two-bedroom apartment and $1,120 for a one-bedroom apartment.
“It’s nice that the rent in Denver is still rising faster than the national average but it’s nice that it slowed down a little bit,” said Andrew Woo, director of data science and growth at Apartment List. “We’re still seeing some of those crazy numbers in other cities like Seattle, even cities like Dallas are going really, really fast.”
Apartment List reports rent prices monthly, using data collected from listings on its website for one- and two-bedroom units during specific time periods. Some listings include apartment developers offering rent concessions.
LoDo is the most expensive Denver neighborhood, where a two-bedroom apartment runs $3,300 or about 83 percent more than the metro median. The median LoDo one-bedroom is $1,450. Highland is the second most expensive neighborhood, where renters can expect to pay $2,390 for a two-bedroom and $1,740 for a one-bedroom.
Despite Colorado Springs massive growth in rent — up 1.5 percent between June and July — the median cost for a two-bedroom apartment is $1,300. The median cost of a one-bedroom in Colorado Springs is $1,120.
Who said many millennials are moving to Denver, in part because there is a high quality of living and because they’ve been priced out of coastal cities such as San Francisco and New York. There is also an attractive job market, which he said can fuel the rent increases as better-paying jobs mean more people can afford expensive apartments.
If rent growth stays within 2 percent to 4 percent, Woo said it is manageable for renters given that inflation is about 2 percent a year. Problems really arise when rent starts increasing by 6 percent to 8 percent.
“I don’t think rising rents are really ever a welcome phenomenon if you are a renter,” Woo said, adding that it can be particularly difficult for long-time residents who don’t have well-paying jobs. “In general, though, I think rent prices are usually a good news for renters.”
The Townhome Market Sparks a Comeback
In an effort to create more affordable housing options for entry-level buyers, home builders are increasingly turning to townhomes.
In recent years, builders focused on constructing higher-end homes. Less than 20 percent of newly built single-family homes were priced below $200,000, and the size of a new home grew to an average of 2,700 square feet, according to Census Bureau data.
The National Association of Home Builders say that rising regulatory costs – up about 30 percent over the past 5 years – means that it is more expensive to build a house today. As such, first-time home buyers have mostly been priced out of the new-home market.
But builders think townhomes may change that. These homes tend to be smaller (the average size was 1,983 square feet, according to 2015 Census data).
Townhouse starts totaled 94,000 in the last four quarters ending with the first quarter of 2016 – a 29 percent increase over the prior year, estimates Robert Dietz, chief economist for NAHB. In fact, the growth rate exceeds the total single-family building market, Dietz notes.
Currently, the townhome market share comprises 13 percent of all single-family homes on a one-year moving average basis, down slightly from just under 15 percent from the high set at the start of 2008. Since the Recession, the townhome market share has steadily grown.
“These trends will continue,” Dietz says. “As regulatory cost impacts persist and millennials enter the for-sale market, the cost of construction and the growing demand for medium-density housing in walkable neighborhoods in inner and outer suburbs will support townhouse development growth.”
Source: “Townhouse Construction Is Growing,” BUILDER (July 29, 2016)
Vail Resorts Makes A Deal for Workforce Housing Near Keystone
Vail Resorts has struck a deal to lease land it owns near Keystone to a developer of workforce housing in an attempt to alleviate its struggles to find beds for its workers in Summit County. Known as the Wintergreen parcel, the plot could eventually yield up to 200 units earmarked for Vail Resorts employees making up to $12 per hour.
Wisconsin’s Gorman & Co. will lease the land for $35,400 per year and is tasked with building the project, which still needs to go through the local planning and permit processes. That means it’s likely too early to pinpoint an opening day for the project, but it can’t come soon enough. Summit County is just one of the extremely tight rental markets where Vail Resorts operates. The resort operator has pledged $30 million to affordable housing for workers across its Colorado, Utah and California properties.
Things got testy last season, when Vail let workers know that it was upping the occupancy of some of its existing workforce apartments in Colorado, allowing four residents where there had previously been two and so on. The brunt of changes like these and the ski town housing crunch more generally is borne by lift operators, ski instructors, and a good number of the people you see working in customer service on the mountain.
The dynamics of a ski town real estate market — where a robust and relatively low-wage service sector is coupled with affluent visitors — mean the money will continue to be in opulent second homes, but hopefully Vail’s commitment to putting money behind this effort will bring more projects like this online.