Sky high rents aren't really surprising to Coloradans anymore. What did catch us by surprise is the first drop in average rental prices in three years.
“It doesn't tell us a lot in one quarter. The average went down three. The median went up five,” said Ron Throupe, Associate Professor of Real Estate at the University of Denver about what it all means.
OK, so the average apartment rental price only dropped three bucks, now $1,368 a month. But it could be a sign of things to come.
“I would expect it to slow down and level off some for a time period,” said Throupe.
We may not see any significant climbs in rental prices in the near future but don't expect new apartment buildings to slow down.
“We have been saying this for years now, 'oh, it's too much supply!' But people keep on showing up to take over those units,” he said.
One of the factors keeping the average so high right now are these luxury apartment properties that continue to pop up across the metro area. One complex at Speer and Grant in Denver starts at around $1,400 for a studio. That’s 525 square feet of space and it keeps rising from there.
For a more extreme case, the penthouses atop The Confluence Denver downtown will each go for $12,000 a month. Vacancies in the Denver Metro hover around 5% right now.
“Here's the thing, a lot of those that are living there are either doubling up or coming from another market. And if they are coming from another market that's more expensive, it's like, 'oh well.' It's not as big an issue. For those that are home grown here, yeah, it's an issue,” said Throupe.
Colorado's population is booming. Meanwhile, single family homes aren't being built as fast as they were before the recession, eight years ago. Condos are nearly non-existent because of construction defect laws. The result, thousands of apartments for rent, helping bring down those sky high rents, if only a few bucks a month.
Even though rents dropped three dollars in the last quarter, people also rented four thousand empty apartments, meaning fewer available to rent. That could be a signal of the average creeping back up slightly in the next quarterly report.