Quarter 3 Denver Metro Apartment Vacancy and Rent Report may be the last
Researchers at the University of Denver’s Daniels College of Business released the third quarter Denver Metro Apartment Vacancy and Rent report with data from June 10–Sept. 10. Results from the report show that the COVID-19 pandemic continues to affect the Denver metro area with an increase in rent and a decrease in apartment vacancies.
The metro Denver apartment market showed an overall quarterly decrease in vacancy to 4.9% from 5.1%, with a year-over-year increase of 0.2% from 4.7%. Vacancy decreased for the majority of counties reported. The Denver metro apartment market added 2,119 new units. Net absorption was 2,910 units for the third quarter.
“These results negate the concern of an apartment market crashing because of COVID-19 effects, albeit certain localized situations are likely,” says report author Ron Throupe, associate professor of real estate at the Daniels College of Business.
While the third quarter was historically the quarter with the greatest rent increases for the year, in recent years, the rent increases had come earlier in the year. For this quarter, the average rent started to recover, increasing $15.95, from $1,505.71 to $1,521.66 from the second-quarter results. The year-over-year change from third quarter 2019 ($1,506.36) results in a yearly increase of $15.30. Median rent rose from second-quarter 2020’s $1,453.97 to $1,463.34 for a quarterly change of $9.37.
“With another decrease in vacancy, the concerns of rental flight due to COVID-19 has not occurred,” Throupe says. “Only time will tell if certain market areas experience migration of populations to other areas. This will likely take several years to play out.”
As part of a special survey of COVID-19 effects, the participants for this quarter were again asked about the delinquency patterns for the months of July, August and September, which augments data collected prior for April, May and June. The results show that the amount of non-payment remained low, with the majority of respondents saying their results show less than 5% of tenants not paying. There is some erosion of percentage of those paying rent from April to August, as the number of communities experiencing a 5.0%–9.99% of non-payment increased. The number of communities with greater than 10% non-payment is now slowly increasing.
The federal CARES Act provisions along with state initiatives on eviction moratoriums continue, but with modifications, such as a need to prove hardship for eviction exclusion.
“This has relieved some of the concern of what is called the ‘free rider’ issue of non-affected or slightly affected tenants not paying rent because of COVID-19,” says Throupe. “Many responses to the special survey questions continue to mention rent deferral programs in place during these months, illustrating their impact, both locally and nationally. As the COVID-19 pandemic continues and government relief program extensions are debated, future rent variations may appear.”
The Denver Metro Area Apartment Vacancy and Rent Survey is conducted by the University of Denver’s Daniels College of Business and Colorado Economic and Management Associates. It’s published by the Apartment Association of Metro Denver and the Colorado Department of Housing is the main sponsor.
Due to COVID-19-related budget cuts, the Colorado Department of Housing is unable to continue its sponsorship of the Denver report, along with the Colorado Springs and Statewide reports. Many organizations use this report quarterly within their reporting and baseline trends. However, it is not financially viable to continue to produce the report, and unless one or more new sponsors is secured, this could be the final issue.
For interviews with Ron Throupe, please contact Kristal Griffith at Kristal.Griffith@du.edu. To obtain a copy of the Denver Metro Area Apartment Vacancy and Rent Survey report, please contact Christopher Dean, vice president of communications for the Apartment Association of Metro Denver, at 303.329.3300, or visit www.aamdhq.org.