Denver's Tight Housing Market

It's a seller's market in Denver's housing market right now. 

There were 486 active real estate listings in Denver yesterday, including lots and mobile homes, according to a friend of mine who follows these things. This is down from the start of 2022 when there were only 1,477 active properties on the market in the Denver (968 single family homes and 509 condos), which is 11,175 fewer houses on the market than usual.

Denver's population was 715,522 at the 2020 United States census, a 19.22% increase since the 2010 United States census. The average household size in Denver is 2.29 people. Denver has about 312,455 households in all, and Denver's demand for home went up by 50,372 homes in the last decade, on average, 5037 new households per year.

About 20% of people in Denver, in a typical year, live someplace different than they did a year ago. So there are a lot of people looking for new places to live.

As of July 1, 2019, there were 338,341 housing units in Denver. Denver issued 5,059 building permits in 2020, some of which was for commercial properties, but some of which was for apartment buildings with more than one residential unit. So, supply and demand are neck and neck. This has led to soaring housing prices.

Also, it is worth noting that while Denver's population is rising, that enrollment in the Denver Public Schools is actually falling significantly, to the point where the district is planning to close schools and lay off teachers and staff. 

Migrants to Denver are apparently disproportionately childless adults (often Millennials), and people are having fewer children. Indeed, the high cost of housing in Denver, fundamentally driven by a failure of housing construction to keep up with demand, is one of the reasons people are having fewer children.

Housing prices in Denver are soaring at far more than the rate of inflation, eyeballing it, an increase of 125% from 2012 to 2020 (an average rate of increase of 10.7% per year).

In 2021, the average price of a single family home in the Denver metro area was $612,274, up 16.68% over 2020, an all-time high and the tenth consecutive year of rising housing prices. 

In December 2021 in the Denver metro area the median price for a residence was $545,000 (average $626,573), the median price for a single family home was $599,990 (average $705,753), and the median price for a condo was $381,500 (average $441,390), all of which are record highs.

Rents in Denver are no better. As of October 2021:

[A]ccording to October’s National Rent Report from Zumper, the third largest online rental platform in the U.S.

Since pandemic closures swept the nation in March 2020, Denver’s median one-bedroom rent has risen 11.8 percent, and two-bedrooms grew 14.3 percent. In 2021, those rates have climbed 20.7 percent — making Denver the sixteenth priciest rental market in the U.S.

Median Denver rent for a one-bedroom is $1,690, and $2,190 for a two-bedroom. . . . One-bedroom rent prices are highest in New York City, where they’re $3,100, followed by San Francisco at $2,800 and Boston at $2,530.

There also aren't lots of rental vacancies. In 2021, "metro Denver’s apartment vacancy rate plunged from 5.5% in the first quarter to 3.7% in the second[.]"

In contrast, "the median rent in metro Denver, including the incentives offered by landlords, was $805 in the first quarter of 2010, according to RealPage." This was an increase of 81% from 2010 to 2018. 

Another source says that average rents in metro Denver were up 85% from 2010 to 2019 (somewhat less than the 105% increase in the median housing price in that time period in the metro area). There were 61,700 apartment units built in the Denver metro area from 2010 to 2019. 

Meanwhile, median household income in metro Denver was up only 55% from 2010 to 2019. Inflation from 2010 through 2022 has cumulatively been 28% (nationally).

Zillow puts the increase in rent from 2010 to 2019 at 88% in the Denver metro area.

This is a stark contrast with metro Denver from 2000 to 2010, when metro area rents grew at slightly less than the rate of inflation (a 22% increase in nominal dollars and a 2% drop after adjusting for inflation). 

Moreover, since the surge in prices is driven by the fundamentals of demand outstripping supply, this doesn't appear to be just a speculative price bubble that could pop at any time.