Apartment rents changed little in April compared to the same time last year — at least in most Colorado communities. But the flatness comes after two years of soaring costs for renters and homebuyers.
Over the past four years, rents in the city of Denver grew 13.8% to $1,568 by April, compared with $1,378 in April 2019. That settled down to a 0.8% annual increase this past year, or $12 more per month from a year ago. That was less than the rate of inflation and one of the lowest increases in the Front Range.
Areas outside of Denver experienced greater rent hikes. In Colorado Springs, rents were up 29.1% to $1,528 in the past four years, while Fort Collins was up 25.6% to $1,704.
Rents continued to increase in the past year in Fort Collins, which had the largest increase in all the Front Range, at 5.2% in April. No wonder renters like Fort Collins resident Kendall Stephenson shared their woes.
“Things aren’t subsiding in Fort Collins on the rental side,” said Stephenson, who’s halfway through a Ph.D. program at Colorado State University. “I am paying 35% more than I was when I moved here three years ago.”
Even as rents shot up in the Denver area since the pandemic, the metro area ranked in the bottom half of rent increases nationwide since January 2020, according to Zillow, which tracks the housing market. With an average rent increase of 22.6% over three years, Denver ranked 34th nationwide, below the U.S. rate of 27.8%. Zillow estimated rent in metro Denver at $2,031 in April, up from $1,656 in January 2020.
“Denver rents have grown quite a bit over the past three years, but nowhere near the most in the country,” said Alex Lacter, a spokesman for Zillow.
Median house prices fall, but are still above $550,000 in Colorado
Meanwhile, the median sales price for a house dropped again in April, according to the Colorado Association of Realtors. In Colorado, prices fell 5.8% in a year to $565,000, while townhome and condo prices declined 3.8% to $420,000. Single-family home prices in metro Denver declined 6.9% to $614,170 and condos dipped 6.7% to $414,320.
Despite the drop from a year ago, those prices were higher than they were in March.
And even with the sinking prices, though, the cost to buy a house is greater than some renters can get their heads around.
“I’m a renter in my 60s and the idea of purchasing a condo, townhouse or a small house will probably never happen unless I decide to leave Colorado, and that’s not going to happen! So, I’m stuck renting until who knows how long,” said Maggie Bolden, who lives in Denver. “We need more affordable housing to accommodate people of all income levels.”
The lack of affordability keeps worsening.
According to one analysis, Denver is ranked as the fourth best metro to rent rather than buy. Clever Real Estate, which provides educational resources for buyers, divided an area’s median sales price by its median annual rent to come up with a price-to-rent ratio. A ratio of 21 or more means it’s better to rent. Denver’s ratio was 25, the same as Los Angeles and Salt Lake City. But in Los Angeles, rents are much higher. Clever concluded that it’s better to rent in 45 of the 50 most populated metro areas in the nation.
Most first-time buyers aren’t looking for a median-priced house, though, just a starter home. And there are still houses or condos available for less than a half-million dollars in Colorado.
“The main kicker here for Denver’s would-be home buyers is that it’s just simply much more affordable to rent versus owning a home,” said Sam Huisache, a data writer with Clever, in an email. “Another way to look at this is the number of months it would take to be able to afford a home in Denver: that’s 294.1 months — or 24.5 years — to afford to buy a home. The issue here, that’s affecting major metros around the country, is that rent prices have become so high that it’s not feasible to actually save up enough in a reasonable time frame to afford a home. When most of one’s income is going toward rent, one can’t afford to put money aside for a substantial down payment.”
Not all renters want to buy a house right now, anyway. Stephenson said he’ll likely move out of Colorado after school. He’s burdened with student loan debt and his teaching wages are poor.
He doesn’t regret the loans but said “the debt will likely be a major hamstring for me once I have to start repayment again.”
According to Zillow data, monthly rents and mortgage payments were similar for much of 2019 and 2020. But as housing prices rose and interest rates started climbing in spring 2022, so did monthly mortgage payments. Diving into home ownership is a financial decision but it’s also personal, said Lacter, with Zillow.
“Whether it’s better to rent or buy depends quite a bit on each household’s situation,” Lacter said. “Strictly from a financial perspective, that depends on things like a household’s budget, how much they’re able to put down on a possible home purchase, their credit score and how long they plan to live in that home.”
➔ Rent or buy? Do the math. Try Zillow’s calculator to estimate when renters would break even and whether it’s a good time to jump into home ownership. >> Rent vs. Buy
Another legislative session wraps
Gov. Jared Polis’ proposal to address the increasing lack of affordable housing in the state came to a halt Monday. Senate Bill 123 aimed to increase residential density by encouraging more multiplexes statewide. The bill would have lifted the restrictions on multifamily housing that cities and towns have enacted over the years.
The Colorado Municipal League and even the mayor of Denver were opposed. The bill essentially didn’t move forward before the legislative session ended Monday night. In a special wrap-up event, Colorado Sun politics editor Jesse Paul questioned Polis on what happened.
“As someone who likes to look around the corner, this is becoming a detriment to our economy,” Polis said. “It’s a typical example of government overreach, of an artificial scarcity that’s created just by government regulations, almost entirely. Left to its own, in a free market, the housing market keeps up with the demand.”
➔ Watch it here: 2023 Colorado Legislative recap
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Other working bits
Colorado wages grew 7.9%. Average hourly wages in Colorado rose 7.9% to $32.63 last year from the prior year, according to the latest Occupational Employment and Wage Statistics from the U.S. Bureau of Labor Statistics. That’s also 9.6% higher than the U.S. average of $29.76. In Colorado, top-paying occupations were neurologists, surgeons and physicians, who all averaged above $300,000 a year. On the low end: taxi drivers and fast food workers. >> See Colorado data
Space consortium gets $1 million grant. The U.S. National Science Foundation awarded a $941,375 “Engines Development” grant to the Advancing Space Technologies at the Catalyst Campus in Colorado Springs to support building the space ecosystem. It was one of 40 grants nationwide. AST is collaboration among the local chamber as well as the National Cybersecurity Center, University of Colorado Colorado Springs and others to build a regional workforce and develop startups that focus on national security in space. >> Details
Teen summer workers have it good in Colorado. At least that’s according to Cool Jobs, an Atlanta-based job site. The company ranked the best states nationwide for teenagers to get a summer gig and Colorado ranked 10th. What’s the draw? The higher paycheck, which averaged $997 a month. That tied with Montana and was short $7 from Wyoming, which ranked ninth. Of the trio, Colorado has the highest minimum wage, at $13.65 compared with the $7.25 in Wyoming and $9.95 in Montana. For what it’s worth, New Mexico ranked sixth, while Utah was 22nd. The national average pay for teen summer jobs: $880 a month. >> Report
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Thanks for sticking with me for this week’s report. As always, share your 2 cents on how the economy is keeping you down or helping you up at cosun.co/heyww. ~ tamara
Miss a column? Catch up:
- What’s Working: The back and forth recession fears continue in Colorado’s economy
- What’s Working: Colorado women earned 85.4 cents for every dollar a man made in 2021
- What’s Working: When the CHIPS Act, education and jobs come together in Colorado
- What’s Working: As home prices drop, Colorado’s real estate industry looks to history to understand trends
- What’s Working: Colorado moves past bank failures, while startup industry reassesses
- What’s Working: Colorado entrepreneurs must make money to spend it as recession talk increases
- What’s Working: Colorado’s unemployment rates weren’t what you thought they were
- What’s Working: Tipping for fast food, to-go pick ups, pot and … wedding gowns?
What’s Working is a Colorado Sun column about surviving in today’s economy. Email email@example.com with stories, tips or questions. Read the archive, ask a question at cosun.co/heyww and don’t miss the next one by signing up at coloradosun.com/getww.