The bad news for metro Denver area renters continued in the first quarter, as average rents increased both from the fourth quarter of last year and year-over-year, with vacancy rates remaining at historic lows, according to the Denver Metro Area Apartment Vacancy and Rent Survey released Friday.

Landlords, on the other hand, couldn’t be happier.

The average rent hit $1,765 per month. That’s 3.3% higher than the fourth quarter, and a 14.4% increase from the same period last year. Vacancy rates stood at 4.3% — 21.82% lower than Q1 2021, according to the report, compiled by the Apartment Association of Metro Denver. The survey of 129,893 apartments was conducted by the University of Denver’s Daniels College of Business and Colorado Economic Management Associates.

“Metro Denver’s continually low vacancy rates are both a positive and negative indicator for the health of the city’s rental market,” according to the report summary. “Low vacancy should inspire some confidence, as it indicates strong demand, a steady cash flow for rental housing providers and strong rental housing security for residents. It also indicates a severe need for housing development, as demand for rental housing continued to outpace new construction during Q1 2022.”

In the last quarter of 2021, there were 382,321 rental units in metro Denver. That grew by 1,936 units in Q1 to 384,257. That’s an almost 70% decrease from the new units added in the fourth quarter — and apparently nowhere near enough to meet demand.

“We need to continue to make progress on delivering new apartments quickly,” Executive Vice President Mark Williams said in a news release. “If we don’t make a serious investment in allowing for new development, demand pressures will continue to strain Denver’s rental housing market.”

Developers delivered 12,036 metro Denver units in 2021 and 11,420 in 2020. The largest number of units delivered in a year came in 2017 when 13,348 apartments were completed. This year, builders are on course to deliver just 7,744 based on Q1 numbers.

The report notes the same thing is happening in major metropolitan markets across the United States.

“Across metro Denver, we’re seeing a record number of applications for rental housing, and we don’t have enough units to meet that demand,” Drew Hamrick, senior vice president for government affairs and general counsel, said in the release. “The key to housing affordability is housing supply. We need to incentivize new development through sensible, pro-building policies, like tax credits, development grants and permit-fee reductions. If we don’t increase our rate of construction, prices will continue to rise.”

The highest rent average came in downtown Denver, at $2,154 per month. The lowest rent average came in the Aurora northwest submarket, at $1,468 per month.

The highest vacancy rate was in Commerce City, at 18.6%. The lowest vacancy rate for the first quarter was in Denver’s City Park area, at less than 1% (.7%).

The authors of the report took a shot at Denver’s proposed ordinance to require developers to include a certain percentage of affordable units in each new development — or pay the city more to subsidize affordable housing elsewhere.

“Denver and the surrounding suburbs must increase the speed at which developers obtain zoning approvals, and they should avoid adding additional barriers to building, like affordable housing requirements, rent control and new permitting fees,” according to the report summary.

Denver City Council is set to discuss, and possibly approve, the proposed ordinance in the coming weeks.

The bad news for metro Denver area renters continued in the first quarter, as average rents increased both from the fourth quarter of last year and year-over-year, with vacancy rates remaining at historic lows, according to the Denver Metro Area Apartment Vacancy and Rent Survey released Friday.

Landlords, on the other hand, couldn’t be happier.

The average rent hit $1,765 per month. That’s 3.3% higher than the fourth quarter, and a 14.4% increase from the same period last year. Vacancy rates stood at 4.3% — 21.82% lower than Q1 2021, according to the report, compiled by the Apartment Association of Metro Denver. The survey of 129,893 apartments was conducted by the University of Denver’s Daniels College of Business and Colorado Economic Management Associates.

Metro Denver apartment rents fall

“Metro Denver’s continually low vacancy rates are both a positive and negative indicator for the health of the city’s rental market,” according to the report summary. “Low vacancy should inspire some confidence, as it indicates strong demand, a steady cash flow for rental housing providers and strong rental housing security for residents. It also indicates a severe need for housing development, as demand for rental housing continued to outpace new construction during Q1 2022.”

In the last quarter of 2021, there were 382,321 rental units in metro Denver. That grew by 1,936 units in Q1 to 384,257. That’s an almost 70% decrease from the new units added in the fourth quarter — and apparently nowhere near enough to meet demand.

“We need to continue to make progress on delivering new apartments quickly,” Executive Vice President Mark Williams said in a news release. “If we don’t make a serious investment in allowing for new development, demand pressures will continue to strain Denver’s rental housing market.”

Developers delivered 12,036 metro Denver units in 2021 and 11,420 in 2020. The largest number of units delivered in a year came in 2017 when 13,348 apartments were completed. This year, builders are on course to deliver just 7,744 based on Q1 numbers.

The report notes the same thing is happening in major metropolitan markets across the United States.

Developers have doubts about Denver’s plan to boost affordable housing

“Across metro Denver, we’re seeing a record number of applications for rental housing, and we don’t have enough units to meet that demand,” Drew Hamrick, senior vice president for government affairs and general counsel, said in the release. “The key to housing affordability is housing supply. We need to incentivize new development through sensible, pro-building policies, like tax credits, development grants and permit-fee reductions. If we don’t increase our rate of construction, prices will continue to rise.”

The highest rent average came in downtown Denver, at $2,154 per month. The lowest rent average came in the Aurora northwest submarket, at $1,468 per month.

The highest vacancy rate was in Commerce City, at 18.6%. The lowest vacancy rate for the first quarter was in Denver’s City Park area, at less than 1% (.7%).

Denver committee moves affordable housing proposal to full council

The authors of the report took a shot at Denver’s proposed ordinance to require developers to include a certain percentage of affordable units in each new development — or pay the city more to subsidize affordable housing elsewhere.

“Denver and the surrounding suburbs must increase the speed at which developers obtain zoning approvals, and they should avoid adding additional barriers to building, like affordable housing requirements, rent control and new permitting fees,” according to the report summary.

Denver City Council is set to discuss, and possibly approve, the proposed ordinance in the coming weeks.