Falling Apartment Rents Shouldn’t Concern You
Some people are finding their faith in Denver’s real estate market shaken by the report that, for the first time in years, apartment rents fell in Denver this summer. Could this be the first hints of an overall decline? Not at all.
With the COVID pandemic, the desirability of apartment living has fallen dramatically. This isn’t just in Denver, it’s happening coast to coast. But this is actually good news for people investing in rental homes.
Instead of looking for apartments close to the action of bars, nightclubs, and other social spots, people are looking for houses that can be their personal island home. And because that home is expected to provide for more of their entertainment needs, they are prepared to pay more for it.
Denver’s Growth Isn’t Slowing
One of the keys to this hot rental market is the continued growth of Denver’s population. Denver proper grew by nearly 20% in the last decade, with people moving from around the country and the world accounting for almost two-thirds of that growth.
That trend was picking up last year and it hasn’t slowed this year. Although there were concerns that the pandemic might have dampened the sales market, August 2020 set new house sales records, growing nearly 33% from 2019 and showing that this trend was not blunted at all.
Shortage of Homes
The record sales volume in August also meant a record shortage of homes for sale. The supply of houses for sale dropped by over 50% year on year.
This really helps the rental market. When there are fewer houses for sale, it’s harder for people to buy, and they end up renting instead. Some of these will be short-term renters, a year or less, but many find they’re comfortable renting and continue to occupy the house long-term.
Prices Keep Rising
Of course, with high demand and a shortage of homes for sale, prices keep rising. The median price of homes bought in August was up nearly 10% from 2019. While this can make the market a challenging one for investors, it also makes it a great opportunity.
With high house prices, many people moving to Denver find they can’t afford to buy and end up renting instead. This keeps demand for rental houses high.
It also means that investors in the Denver market will find themselves in a good position if they decide they want to sell rather than continuing to rent. Appreciation of homes is money in the bank, money that you can cash out by refinancing or by selling. In Denver, this continues to be an almost guaranteed return on investment.
Need Help Getting Started?
Denver continues to be a hot rental market, but it’s also a challenging one to get started in, with large obstacles like finding capital making it hard to start. If you want help navigating these potentially dangerous waters, connect with Invest Success today. Our real estate investing mentors can help you find bargain houses, repair them, and fill them with renters so you can enjoy the benefits of passive income.