The Apartment Market is on Fire Too

DU’s Daniels College of Business released their 2nd quarter apartment vacancy and rent report. The apartment market changed dramatically!
· The vacancy rate dropped from 5.5% in the first quarter to 3.7% in the second quarter. That’s a drop of 33%!!! I have never seen such a BIG change!
· Median rent increased by 6.5% in the 2nd quarter from the first quarter. Median rent is now $1580. Median rents are up 8.5% year over year.
· Average apartment rents increased by 7% in the second quarter versus the first quarter as the average apartment rent is now $1651.
· New tenants absorbed an astonishing 10,298 apartments last quarter which is what caused the vacancy rate to plummet.
· Last year new tenants only absorbed 8,195 units for the entire year.
· Developers added 2,495 new units in the second quarter.
· Even downtown Denver’s apartment vacancy rate dropped from 10.9% in the first quarter to 5.3% in the second quarter. This is even more shocking to me.
· According to the CO Apartment Association rent collection in June was an astonishing 97.2%, not far from pre-pandemic levels.

What created over 10k new tenants last quarter? It’s believed to be because many young adults moved back out of their parents’ homes as our economy reopened. Plus lots of high school and college graduates too. But, I also think many thousands of people are moving here too. Finally, I am afraid the tight for-sale market pushed many people back into the rental market.

In a separate survey from Apartment List they said apartments rents in Colorado rose a whopping 11.6% statewide year over year. In Denver rents were up 8.8%, in Parker rents are up 17.3%, in Thornton up 16%, and in Littleton up 15.4%.

With the apartment rental market being on fire too this should push more people back into the for-sale housing market. And I encourage people to make this decision quickly as procrastination almost never pays in the Denver RE market.