The Denver rental market has been a roller coaster because of the COVID-19 pandemic. The last few years brought uncertainty, highs, lows, and affordability problems.
If you are searching for a rental, you might be feeling frustrated because of low inventory and high rent prices. If you own a rental property, you are likely having no trouble finding renters. However, some renters are having difficulty paying rent.
Real estate investors need to be ready to pay high amounts to acquire new properties in the Denver area. The market is highly competitive.
The rental market is fluid, and many factors affect this market. It’s essential to understand the current trends when looking for a rental or owning an investment property. Here is a look at Denver rental market predictions in 2022.
Effects of Higher Interest Rates
One of the most significant issues on people’s minds is the recent interest rate hike. What will this mean for real estate? Many believe that this rate hike will cool the red-hot housing market.
It’s becoming more expensive to borrow money. With higher interest rates, those looking at homes will have less buying power. Every 1% increase in the interest rate on a borrower’s loan decreases their purchase power by about 12%.
This increase will price some people right out of the market. Because of this, there should be fewer bidding wars, providing some relief to those who can still afford to buy.
However, this will not bring relief to the rental market. With more people being priced out of homeownership, the price of rentals will rise because of increased demand.
Increased Demand for Rentals
This increased demand for rentals is not just due to the interest rate hike and red hot housing market. During the pandemic, some people moved out of big cities like Denver. Some moved back in with relatives or simply found a cheaper area due to the possibility of working remotely.
Now, as more workers are coming back to the office, cities such as Denver are seeing increased demand for rentals. People want to get their lives back and live in their own space.
Increased Demand Means Higher Prices
In recent years, rent prices in metro Denver saw a decline. However, this trend is now at an end. Rental prices are going up in Denver for the first time since last summer.
This is true of the metro area as well as the suburbs. This trend is a direct result of basic economics. When demand increases, prices rise.
Renting Could Become More Expensive than Homebuying
As rent prices soar and the real estate market cools, renting could become more expensive than homebuying. However, it’s important to note, that the rising interest rates may still keep buying out of reach for some. In addition, the competitive market will also make it tough to buy, even if it’s more affordable than renting.
Expect Renters to Search for Larger Units
Trends are showing that renters are looking for larger spaces. One reason for this is the shift to working at home. Many renters are looking for a place to have an office. In addition, some renters are choosing to live with roommates because this makes the cost more affordable.
No matter the reasons, most cities have caught on and are building larger apartments. Larger apartment units have been the most popular as we emerge from the pandemic.
Rent Prices may Depend on the Landlord
It’s been an interesting ride through the pandemic for many landlords. Many tenants missed rent, and there were limited options to address this because of the eviction moratorium. Emergency Rental Assistance programs were available, but these were confusing and could not always help.
Because of this, many landlords faced losses. To recoup these costs, landlords may now choose to evict renters struggling to pay rent. Most will not be as lenient with rent payments, especially with a vast pool of potential renters.
In addition to evicting renters who can’t pay the rent, landlords may also sell their properties or raise rent to recoup losses. With the hot real estate market, it’s an excellent time to sell. If you’re renting a house, keep in mind that your landlord may decide to sell and leave you searching for another rental. If many landlords choose this route, this could deplete the supply of rentals further.
It’s a Great Time to Be a Real Estate Investor
If you could purchase property before prices skyrocketed, you are in an enviable position. Rising rents could lead to increased cash reserves and the ability to add more properties to your portfolio.
Many sellers will choose a cash offer because it’s a sure thing. Even if you have to pay more for a home, rising rent prices could still make it worth it.
It’s Not a Great Time to Be a Renter
Renters all over the country are struggling to make their rent payments. Inflation, rising food and gas prices, and higher rents make it difficult to get by. Anyone who gets evicted or if the owner decides to sell will find themselves in a challenging position. It’s challenging to find a rental right now. Be prepared for competition.
Work With a Property Management Company
These Denver rental market predictions may sound grim for renters. However, they sound favorable to landlords.
No matter which position you are in, you can benefit from working with a property management company like High Point Property Management. We keep a close eye on the Denver and surrounding area rental market forecast to help our clients.
We can help you navigate the market and reach your goals through our expertise.
We offer a rental search on our website. This allows you to see available properties in Denver and surrounding areas. You can also submit an application on any of the listings to begin the digital application process and request a showing through our site. Having everything in one place makes the rental search simpler.
For landlords, we offer property management services. Find honest, upfront pricing, 24/7 property management, and streamlined technology with us. We have extensive real estate experience, so you can rest easy knowing that your property is in good hands.
You aren’t in this rental market alone. Get in touch with our team at HighPoint Property Management today to help you reach your rental goals.