Friday, November 4, 2011

Rent growth has accelerated over past 6 quarters

During 2011's third quarter, the median rent in metro Denver rose to an all-time high of $881, rising 2.9 percent over 2010's third quarter median rent of $856. Since the third quarter of 2009, the median rent has risen 7.9 percent.

Both the median rent and the average rent have risen in metro Denver, although the average rent has risen slightly less with an increase of 2.6 percent, year-over year, for the third quarter.

As can be seen in the first graph, both median and average rent have increased steadily since 2009, and both tend to track together.

(For more on the relationship between median and average rent, see here.)



In the second graph, we see that in year-over-year comparisons, the median rent in metro Denver has increased in each quarter for the past seven quarters. The average rent has increased, year over year, during the past six quarters. We can also note that the magnitude of the year-over-year increases since 2010 have been larger that the average growth from 2002 through 2009. The average year-over-year increase in the median rent since the first quarter of 2010 has been 3.3 percent. By contrast, if we measure the growth years from 2004 to mid-2008, and ignore the periods of recession, we find that the average year over year change during that period was 1.6 percent. In other words, the period of rent growth between the last two recessions produced about half as much rent growth on average than the period since early 2010.



We can also note that with the exception of the first quarter of 2011, the growth in the median rent has exceeded growth in the average rent in every quarter since the 4th quarter of 2009. This suggests that rent growth is not just a phenomena among the priciest and most desirable units.

In the third graph, we see the average rents among the metro Denver counties. Douglas County and the Boulder/Broomfield area have the highest rents, while Jefferson and Arapahoe counties tend to have the lowest.



All areas' average rent increased from the third quarter of 2010 to the third quarter of this year:

Metro Den 2.5%
Adams 2.2%
Arapahoe 1.3%
Boulder/Broomfield 3.8%
Denver 4.9%
Douglas 0.6%
Jefferson 2.7%

The increases were more solid over a two-year period. Over the two-year period from the third quarter of 2009 to the third quarter of 2011:

Metro Den 6.2%
Adams 10.2%
Arapahoe 3.4%
Boulder/Broomfield 8.3%
Denver 6.9%
Douglas 5.8%
Jefferson 8.5%