Nearly one in three Denver renters is looking to move somewhere else, with the cost of housing likely to be among the biggest factors. But because so many people from outside Denver are moving to the Mile High City, there's a good chance rent prices won't fall in the foreseeable future.
Those are among the takeaways from a new study by Apartment List, whose new interactive mapping tool is debuting today, June 12. The appliance draws from user searches to divulge how many people are interested in moving to or from locations across the country, and according to Apartment List housing economist Chris Salviati, who authored the latest report, 31 percent of apartment hunters currently living in Denver are searching outside the metro area.
That doesn't mean they've had their fill of Colorado living. "Among those looking to move elsewhere, the top three most popular destinations are Colorado Springs, Boulder, and Fort Collins, which together account for one-in-three outbound searches going outside the metro," allows Salviati, corresponding via email. "These destinations are all close to Denver but notably more affordable, indicating that many of those leaving the Denver metro want to stay in the area, but are looking for a lower cost of living."
High rent prices in Denver have been a problem for years. Indeed, back in 2017, approximately two-thirds of Denver renters wanted to relocate. Over recent months, Denver rent costs have moderated, but as Salviati points out, they haven't changed course.
"Year-over-year rent growth in Denver currently stands at 1.8 percent. While this is slightly ahead of the national average, rent growth in Denver has cooled significantly from where it was a few years ago. For comparison, in 2015 we saw year-over-year rent growth in Denver ranging from 5-8 percent," he reveals. "However, it's important to note that rent prices are still increasing, just at a slower rate."
A shortage of rental units created upward pressure on rents in Denver during much of this decade. The ongoing building spree has mitigated that problem to some degree, but it lingers in part because developers have focused on building apartment complexes that only rich people can afford.
"It's true that new construction in Denver has skewed toward the luxury end of the market," Salviati confirms. "While all new housing units are helpful in easing supply pressure, Denver's job market has grown substantially in recent years, and while the new construction that has been completed recently has eased rent growth, it has not reversed the trend of rising prices. This rent growth has certainly contributed to a shortage of affordable housing in the area."
And then there's the matter of Denver's appeal to folks from across the country. By Salviati's calculations, 55 percent of renters searching for apartments here are from other municipalities, where prices are even worse — one reason that Denver is the second-most-searched U.S. city by renters right now, behind only Tampa, Florida.
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"New York City, Washington, D.C., Los Angeles, San Francisco and Miami all crack the top ten for inbound searches to Denver," he discloses. "Despite Denver's recent rent growth, it remains more affordable than these coastal hubs, which have some of the most expensive housing in the country. Meanwhile, Denver offers employment opportunities that may be equally attractive to what one may find in those other metros," thanks largely to "an extremely strong local economy, driven by a tech boom that has been going on for years."
These figures indicate that "the inflow of renters to Denver is larger than the outflow of renters leaving the metro," Salviati continues. "This is consistent with data from U.S. Census, which shows that population growth in Denver has been consistently outpacing the national average."
If developers keep up what Salviati refers to as "an elevated pace of construction to meet the demand" created by all of these transplants, "prices will remain stable. But if there's not enough new supply to meet demand, rent growth may pick back up. In any case, prices are unlikely to come down in the near-term."
Meanwhile, a lot of the renters looking to move outside Denver to other Colorado communities may be returning regularly. Salviati alludes to "previous Apartment List research showing substantial increases in the share of workers who 'super-commute' more than ninety minutes to work each way, as well as in the share who work remotely. It may be the case that many of those who are leaving Denver but staying in the region are maintaining jobs in Denver."