Denver Market Watch News May, 2011
In a rational world, as rents rise, people will move out of apartments and sign on the dotted line for a home. In the first-quarter of the year, the average monthly rental rate in a Denver-area apartment rose 3.9 percent from the first quarter of 2010. That marks the biggest year-over-year increase in 10 years. The overall apartment vacancy rate of 5.5 percent is also at a 10-year low. The median price to rent an apartment in the Denver area set a record of $858.97 in the first quarter.
It’s not just Denver. Nationally, experts expect apartment rents to rise at least 5 percent this year. An official at the National Multi Housing Council, a trade group for apartments, said Denver is considered one of the strongest rental markets in the country. Many real estate investment trusts, or REITs, which own apartments, have seen their stock prices rise by more than 50 percent in the past year.
If you want to rent a home in the Denver area, the market is even tighter, with a vacancy rate of a mere 2 percent. Any improvement in the local economy is expected to drive vacancy rates lower and rental payments higher. Even without a stronger economy, rents will rise because there is little construction to support the growing demand. At the same time, Denver-area home prices are still affordable and mortgage rates—unexpectedly—remain near historic lows.
If you are a renter, consider these steps:
- Have a Realtor run an analysis comparing the after-tax cost of owning a home vs. renting.
- If you have credit problems, speak with a lender on how to improve your FICA score.
- Get pre-qualified for a mortgage, so you can shop for a house in your price range.
- If you already own a home, and have spare cash, talk to a Realtor about buying a rental property.
- If you continue to rent, brace yourself for sticker shock when your rent rises.
Average and median rents in the Denver area from the first quarter of 2000 to the first quarter of 2011
The Denver-area housing market will not suffer a double-dip in housing prices, the chief economist for Wells Fargo predicted, and he also said that there is no chance Congress will eliminate the mortgage interest deduction.
The market for million-dollar homes in the metro Denver area continues to improve, 55% more million-dollar-plus homes — and 100% more condominiums in that price category — sold in April than in March, according to Gary Bauer, an independent Littleton-based real estate broker and Metrolist analyst.
The Labor Department says job openings rose by 99,000 to 3.1 million in March. That’s the highest level of openings since September 2008 and the second straight monthly increase.
MDC, which builds homes under the name “Richmond American Homes,” announced it has acquired “substantially all of the assets” of Seattle-based SDC Homes, LLC . The price MDC paid was not disclosed. It was a stock-and-cash deal.
Newmark Knight Frank Frederick Ross announced that BGC Partners, a leading broker of financial products, has agreed to buy Newmark, the real estate advisory firm that operates as Newmark Knight Frank in the U.S.
Overall, Denver-area new home activity in the first quarter fell by 18.84 percent from the same period in 2010, led by a 30.23 percent drop in permits for single-family attached homes – primarily condos and town homes:
The Denver-area housing market showed a 2.6 percent decline in value in February from February 2010, but that was still good enough for fifth place out of the 20 metropolitan statistical areas tracked by the closely watched S&P/Case-Shiller Home Price Indices
The city of Westminster plans to demolish the blighted Westminster Mall to develop a downtown for the 100-year-old community.