Monday, May 5, 2014

Metro Denver's average rent up 8 percent in first quarter as rent growth strengthens region-wide

In new data released this week the apartment vacancy rate in metro Denver was up year over year in metro Denver, rising from 4.6 percent during the first quarter of 2013 to 5.1 percent during the first quarter of 2014. The vacancy rate in metro Denver was 5.2 percent during the fourth quarter of 2013.

The first graph shows the metro-wide vacancy rate:

We can see that the vacancy rates in recent quarters has come up a bit from 2013's very low rates. This is due to new construction in downtown Denver and several other submarkets. Overall, however, vacancy rates remain near some of the lowest levels recorded since 2001.

In the second graph, we see that the decline in the vacancy rates since 2009 have not been limited to any one or two county areas, and that the declines have been general. With the exception of Denver county and Boulder/Broomfield, the first-quarter vacancy rates were all under 5 percent. Denver County and Boulder/Broomfield reported vacancy rates of 6.8 percent and 6.7 percent, respectively, however, and this was due to new construction of  units. The lowest vacancy rate at the county level was found in Jefferson county where the vacancy rate was 3.4 percent.

The average rent for metro Denver can be seen in the third graph. The average rent hit $1,073 during the first quarter of 2014 , and was up from $992 during the first quarter of last year.  The average rent for the area was 1,041 during the fourth quarter of 2013. 

We can see steady increases in general with only a couple of periods of declining rents: from 2001 to 2002, and from 2008 to 2009.  The periods of the greatest growth in recent periods have been the late 1990s and the period since 2011. Rent growt hhas accelerated since 2009.

The fourth graph shows the growth rates in average rent more clearly.  We can see that year-over-year growth rates since the first quarter of 2012 have been coming in at more than 4 percent each quarter. Historically, this is a strong growth rate, but we can also see that it's still below what was reported during the dot-com boom, when growth rates were often above six percent. Nevertheless, the growth over the past seven quarters has been substantial, and the growth rate for the first quarter of 2014 is the highest growth rate measured since 2001. The average rent grew 8.1 percent from the first quarter fo4 2013 to the first quarter of 2014.

In a county-by county basis, we find the following growth rates for the first quarter of 2013 to the first quarter of 2014: 
Adams 8.5%
Arapahoe 8%
Boulder/Broomfield 6.7%
Denver 8.3%
Douglas 6.3%
Jefferson 8.1%

The final graph shows the vacancy rate for all market areas, from the first Q of 2013 to the first Q of 2014. We see that almost all submarkets have fallen below five percent over the past year. This shows that even the traditionally less-demanded areas are seeing tightening vacancies as more popular submarkets tighten up and residents begin to seek vacancy housing across all submarkets.