THE HOME STRETCH

Red-hot

BY SENTINEL STAFF WRITERS

By the end of the year, it’s expected that 2022 will have been one of the best years for apartment construction since the early ’70s. Paired with steadying rental prices, the market is looking slightly less bleak than it has over the last several years for renters, but experts are cautiously optimistic and expect possibly more normalcy in the market next year.

New apartment construction across the country will top 420,000 new units by the end of the year, according to estimates by RentCafe, which tracks the market. In the Denver metroplex, this year came with a projection of 10,570 new apartments. For places like Aurora, where rent increases have been climbing, more on the market may be a signal that rent hikes won’t be as drastic.

Christopher Mayer, professor of real estate at Columbia Business School, said people looking for an apartment now might have a better experience than they did in May or June.

“We’re not seeing rents go up as quickly, the rental market is softening a little bit,” he said.

Despite relatively good news for renters, anyone looking for rents to slide backward are most likely going to be disappointed.

The national median asking rent was up 14% in July over July the previous year, the smallest annual increase since November 2021, according to a new report from Redfin. While that percentage is still high, it has decreased from 15% in June and 16% in May.

Mark Williams, executive vice president of the Apartment Association of Metro Denver, said that the average rental price of all units combined in Aurora is $1,687.

The average for a one bedroom apartment in the city is $1,490, and a two-bedroom, one bath goes for $1,804. That’s according to data from the most recent rental report in late July. Since then, Williams said prices have probably fallen slightly since the highest quarter of the year is almost always when rents are steepest.

After “skyrocketing” previously, Williams said that the market on single family homes is starting to soften. However, “that also is putting additional demand on the apartment market.”

“I don’t see apartment rents slowing down because of that and other factors,” he said.

One of those factors is inflation, which he said is increasing the expenses on apartment managers for construction and other upkeep.

Williams said that a shortage of housing units is also helping to keep prices high. He cited a recent study he saw which claimed that by 2035, 4.3 million new apartment homes will need to be built to keep up with supply. It’s a national issue that is being felt particularly acutely in the booming Denver metro market, where he said rental rates have doubled in the last 12 years.

“I think it’s more dramatic in Denver because Colorado is such an attractive place to work and live,” he said. “It’s more acute here, but it’s not purely a local issue.”