It happens everyday...people walk into our Highland Square office and ask if we know of any rentals available in the area...if we can help them find a place to rent...if we know anyone that can help them find a Denver rental...and we are always happy to listen and give our best advice - which, lately, is to drive around and look for FOR RENT signs...many landlords don't even list their properties online anymore, because a) there are so many rental scammers on sites like Zillow, Trulia, and Craigslist and b) they just don't have to -- they can usually find a great, solid renter through word-of-mouth or a simple sign in the yard.
Unfortunately, rentals are few and far-between in the Denver Metro area these days. With vacancy at an all-time low, and rental rates continuing their fast increase, it can be really difficult to find a great deal on a fab place to rent.
The uptick in rental prices in metro Denver is reflected in a Zillow report released Tuesday that found renters forked out $474 million more in 2014 for leases, according to the Denver Business Journal.
Renters in the the Mile High and surrounding cities paid $4.9 billion in rent, up from $4.5 billion in 2013, a 10.8 percent increase.
On average, the report found that renters paid $86 more per month in 2014 than the year before a total of $1,032 extra per year. The report also found that an estimated 7,000 renters entered the Denver market this year.
Nationally, Americans paid $441 billion in rent in 2014 compared to $420 billion in 2013, a 4.9 percent increase. Denver's rental hikes were among the top three markets in the 50 analyzed, joined by San Francisco and Pittsburgh.
"Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand and insufficient growth in the supply of rental housing," said Zillow chief economist Stan Humphries. "This has created real opportunities for rental housing owners and investors, but has also been a bitter pill to swallow for tenants, particularly those on an entry-level salary and those would-be buyers struggling to save for a down payment on a home of their own." "Next year, we expect rents to rise even faster than home values, meaning that another increase in total rent paid similar to that seen this year isn't out of the question. In fact, it's probable," Humphries added.
So, what does this mean for you?
If you are planning to look for a new place to rent, or if you are moving to the Denver area and want to rent before buying:
- Plan ahead. It's a good idea to start looking for a rental about 3 months in advance.
- Ask everyone you know in the area if they know of any rentals coming available...let them know you are looking to make a move.
- Be prepared to fill out a detailed application, submit to a credit and background check (including a fee), and put down a hefty security deposit.
- Be flexible. Denver has a lot of really great neighborhoods...do some exploring and widen your search area, you might just be pleasantly surprised at what you find!
- Expect to pay about 10% more in rent than you would have last year...and about 10% less than you will next year.
- Be readyto compete...we are seeing "Rental Open Houses" more often lately, where property owners show the home to prospective renters all at once, accepts applications, and then selects a tenant.
If you are looking to buy an investment property:
- Be prepared to write a best-and-final, solid, qualified offer when you find a place that will cash flow.
- Make sure your Denver Realtor has the inside track with other investors who might be thinking about selling their properties in the near future.
- Be flexible. Denver has some great opportunities in up-and-coming neighborhoods where a Buy and Hold strategy makes more sense than a quick Improve and Sell plan...and rental vacancy is low in those areas, too!
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