Will Denver real estate fall? Throughout the country, Denver ranks 6th for top declines in apartment rents for major cities. Colorado Springs was ranked 5th for top increases in rental rates. Why is Denver rent falling while Colorado Springs rents are increasing? Is this indicative of a bigger decline in real estate coming to the Denver metro area?
What was in the data?
Top 10 Markets for Two-bedroom Rent Decreases
Rank County Median Rent YoY Percent Change
1 San Fran, CA $3,931 -21.3%
2 San Mateo, CA $3,380 -11.1%
3 Santa Clara, CA $3,075 -9.2%
4 Suffolk, MA $3,405 -8.1%
5 Middlesex, MA $2,790 -7.0%
6 Denver, CO $2,177 -6.0%
7 DC $3,075 -5.8%
8 Erie, NY $1,188 -5.4%
9 Dallas, TX $1,510 -5.3%
10 Milwaukee, WI $1,575 -5.3%
Top Ten markets for rent increases
Rank County Median Rent YoY Percent Change
1 Hamilton, OH $1,299 16.0%
2 Wayne, MI $1,300 13.0%
3 Essex, NJ $2,400 12.6%
4 Pinellas, FL $1,690 10.5%
5 El Paso, CO $1,395 10.4%
6 Lee, FL $2,200 10.0%
7 Cuyahoga, OH $1,200 9.6%
8 Marion, IN $1,045 9.5%
9 Pima, AZ $1,121 9.4%
10 Monroe, NY $1,250 8.7%
Why is rent in Denver falling
- Supply: lots of new inventory that was in the pipeline coming online
- Job types: knowledge workers can work remotely
- Transition into houses due to low rates
- Advantages of city waning: nightlife, commute, restaurants
- Much more restrictive Coronavirus protocols than smaller or urban markets.
Why Colorado Springs increasing
- Small town feel
- Much less expensive but still have city amenities
- Much less restrictive Coronavirus protocols than Denver
- Can easily get into Denver for a day if needed
Long term will Denver decline?
Ove the next six months to a year, rents will continue to decline a little until stabilizing as “normalcy” returns. I don’t see the bottom dropping out in Denver as the flight from more dense coastal cities will continue and eventually the amenities that drove many to the cities (nightlife, restaurants, no commute, etc…) will come into sharper focus and Denver will be fine. I don’t think it will be a quick V shape recovery as many of the structural economic changes will continue long after the pandemic is over.
Additional Reading/Resources
https://www.realtor.com/research/september-2020-rent/
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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