As reported in the Denver Post, the national supply of new apartment units is expected to drop 11 percent in 2018, which would end a six-year run of accelerating apartment construction. Even so, Denver is poised to buck this national trend. And not just by a little bit, either. What’s different about Denver? The economy, stupid. The primary reason developers cited for the apartment construction slowdown nationally was concerns about increasing interest rates and the economy more generally. Real estate developers and investors think Denver and the Denver housing market in particular is positioned better than most to weather a downturn in economic conditions.
What Do the Numbers Say?
According to Rent Café, the Denver market will have added more apartments units in the first 6 months of the year than it did in all of 2017. The city is projected to experience the biggest percentage jump in new apartments in the entire country. RealPage, another apartment rental industry source says, in terms of actual housing units added, Denver is third just behind Dallas and New York City. It’s further projected that “one out of every 23 new apartments added in the country this year will be in metro Denver.”
Crazy stuff. And great news if you’re looking a rental apartment. You’ll likely find more newer apartment buildings and more vacancies than you would in previous years. Of course, given Denver’s incredible population growth, this construction is needed just to start to catch up with a housing shortage that’s been many years in the making.
Will the Construction Have an Impact on Prices?
More on this front, the next question becomes will this increase in supply finally be enough to put a check on apartment rentals and housing costs in general? Maybe! Rents continued to rise through the first half of the year, but have largely flattened this fall according to Apartment List’s Denver Rent Report. Whether this is a blip on an otherwise upward trajectory, or signals a longer term trend toward greater affordability is dependent on a number of factors that are above our pay-grade.