Denver Rental Market Trends and Update - April 2024

Key Points:

1. Average rental rates for multi-family properties are down, while rental rates for single family homes are up
2. Rental demand is decreasing while rental supply is increasing

The rental market in Denver has seen a decrease in demand after almost a decade of very strong and ever increasing demand. After reviewing data from a number of sources, and comparing that to our internal data, we are sharing the below information on trends in the Denver rental market.

We are looking at five different categories: average rents, month over month change in rents, year over year change in rents, number of vacancies, and average days on the market.

Overall Denver Market

1. Average rent: $2,077.00
2. Month over month change in rent: -$18.00
3. Year over year change in rent: -$73.00
4. Number of vacancies: 3,400
5. Average days on market: 42

While these numbers are important to note, we are not able to draw too much significance from them, as they cover such a wide range of property types. However, breaking these numbers out between multi-family homes (which includes apartments / condos / townhomes) verses single-family homes is where the numbers show more meaning.

Multi-family (Apartments / Condos /Townhomes)

1. Average rent: $1,850.00
2. Month over month change in rent: -$30.00
3. Year over year change in rent: -$65.00
4. Number of vacancies: 2,700
5. Average days on market: 53

These numbers are significant. Rents are down for condos, townhomes, and apartments –  and this is not even taking move-in incentives into consideration. A year ago, there were very few move-in incentives offered to tenants. However, landlords are getting more aggressive in their pricing and offering rent credits and move-in specials.

Incentives are becoming more and more common, meaning that these numbers do not paint a full picture of the average rent for multi-family homes. Part of the reason these numbers are trending lower is because the number of vacancies has increased significantly. Almost 80% of total vacancies in the Denver market are multi-family type properties. With less demand and more supply, the net effect is that multi-family rents are going down.

Single family homes

1. Average rental rate: $3,000.00
2. Month over month change in rent: +$55.00
3. Year over year change in rent: +$50.00
4. Number of vacancies: 700
5. Average days on market: 36

These numbers show that the year over year increase in rental rates for single-family homes is less than 2%. Also, the total number of vacancies is much smaller than multi-family vacancies because most single-family rental properties are owned by individual landlords who only own one or two properties. While the average days on the market is up by historical standards, landing at a little over a month, it is significantly lower when compared to multi-family properties, which are taking almost two months to get rented.

Takeaways: 

• Rental rates for single family homes are trending up, but only slightly
• Rental rates for apartments / condos / townhomes are trending down, and the number of vacancies for multi-family homes continues to trend up
• Overall number of vacancies continues to trend down
• Average days on market is trending up
• Demand is slowing and supply is increasing

There has never been a time in our 45+ years of doing property management that we have seen the market this segmented between demand for single family properties vs demand and multi-family properties.

Recommendations to real estate investors:

1. Prioritize renewals over rent increases

Turnover can be the largest expense a real estate investor faces. When a tenant moves out of a property, that property will normally be vacant for somewhere between 36-53 days, there are repair  and make-ready costs, and the new rental rate will potentially be flat or even lower than it was previously. The market is not allowing rent increases right now, making it vital to focus on renewals and avoid turnover.

2. Focus on single family investments

Single family homes are a more stable and long-term investment. A single-family home will perform better financially – there is higher demand for these types of properties, the rental rate is stronger and more stable, and there will be less turnover.

3. Be prepared for very significant legal changes

As of early April 2024, there are 13 pending Colorado state legislature bills impacting rental housing. If they pass, several of them will go into effect immediately and will have very significant impacts. We will go into further details about these bills in coming months, but these bills will cause very dramatic changes for tenants and real estate investors alike.

We believe that when property management is performed with integrity, both tenants and landlords benefit. Property Management is not just our business - it is a relationship between us, our owner-clients, and our tenant-residents. If these are important to you, we may be a good fit to provide you, your property, and your tenant residence with our award-winning property management service. Feel free to reach out to us for assistance.

Serving real estate investors & residents since 1978

www.RentGrace.com

303-255-1990

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