After slightly slowing in 2016, Denver rent should increase once again next year, with the biggest rent hikes coming in more affordable areas and outlying communities such as Bailey, Elizabeth, and Black Hawk, according to a new forecast from Zillow. The current Zillow Rent Index for Denver is at $2,013 a month, the highest of any major metro area not located along a coast, including Phoenix, Dallas, and the next closest inland city Chicago at $1,643 a month. Zillow is calling for metro Denver’s already high rent costs to rise another 5.9% next year, following a 4.1% increase this year. The only cities facing steeper rent increases in 2017 are Seattle, up 7.2 percent, and Portland, Ore., up 6 percent, according to the Zillow Rent Forecast. Nationally U.S. rents are forecaster to rise 1.7 percent in 2017, the same rate expected in 2016. If the forecast pans out, it would put even more financial pressures on Denver-area renters, who have found housing costs consuming an already high percent of their incomes.
Of the 11,000 new apartments arriving in metro Denver this year, almost all are coming in with high rents and in a small number of urban neighborhoods, according to Aldo Svaldi of The Denver Post. One of the major themes for next year is high-rise luxury apartments, with 10 projects that will be at least 12 stories or taller, including two projects at over 30 stories, all of which are currently underway in either downtown Denver or in Five Points. All the new construction is capping rent increases in the luxury apartment market. Class A apartments in metro Denver rent for $1,765 a month on average and have a 7.5 percent vacancy rate, while class C units, with an average rent of $997 a month, have a low vacancy rate of 2.6 percent, according to Svaldi of The Denver Post, citing statistics provided by Marcus & Millichap. The lower the higher rent raises are coming in he class C apartments which rose 8.7%, while class A apartments rose only 2.2 percent. According to Svaldi This would indicate the market is hungry for affordability, but developers, for a variety of reasons, continue to build luxury units in the urban core. Regardless of what to come, doing a little financial planning may be a good option, Zillow has a few good features to determine your rent affordability and weigh out renting vs. buying.