A new study shows that 2/3rds of people that rent in Denver are planning to move to another city with most saying that high rent costs are the main reason. At the same time, however, so many people from other places want to move to Denver that the actual number of renters in Denver is likely to remain steady in the near future and could actually rise.
These are among the findings in a report from Apartment List. As laid out in the following Q&A with analyst Sydney Bennet, who was heavily involved in the project, residents in Denver that rent have a variety of reasons for wanting to relocate. But the number of those who are considering such a move because of long commute times or concerns about safety pale in comparison to people who are simply are having a hard time paying the rent.
According to Sydney Bennett, affordability of renting in Denver is the primary reason renters want to relocate, with 48 percent of renters citing it as their primary reason for moving. With rapidly rising rents, itís not surprising Denver renters would look for a more affordable place to settle down.
Denver rents have increased 2.7% over the past year and 52% from 2005 to 2015. The second-most-common reason renters want to move out of the Denver metro is for better job opportunities the primary reason for relocating for 22 percent of renters. Renters also want to relocate due to commute time and concerns about safety, with 6 percent of Denver renters moving for each of these reasons.
Although many Denver renters are planning to settle down in a different city, renters from other metros are looking to move to Denver. The Denver renter population isnít shrinking, but rather some renters are leaving while others are moving to Denver. The Denver renter population currently has as many, or potentially even more, renters moving to the metro as leaving. Despite affordability concerns, the strong job market will continue to attract renters from other metros and Denver remains more affordable than some of the priciest East and West coastal cities.
A lot of young renters are happy to relocate to Denver for a good job opportunity. As young renters get older though, reality sets in and they realize they can’t afford to settle down and buy a home. Metro Denver may be attracting renters with job opportunities but must do more to provide affordable housing opportunities beyond an apartment if it wants to keep them long term, Bennet said. They need a home they can afford, or they won’t settle down permanently.
This also doesn’t mean renters are leaving Denver immediately. Renters may be planning to move this year or in five years, when they want to purchase a home or start a family. But Denver poses formidable barriers to purchasing a home as well. In Denver, it takes 14.5 years for a single person to save enough money for a down payment on a house. It takes a married couple 7 years to save for a down payment.
Looking to buy your first home in Denver? Good luck with that. The average price of a home sold in metro Denver as of March 2018 is $522,000. That is up 11.7% from what are already elevated levels. The median price of a single-family home sold in March 2018 was $440,000 up 8.5% year over year according to the Denver Metro Association of Realtors. Both are new records.
To qualify for a 30 year mortgage for a median priced single-family home and assuming a 20% downpayment and interest rate of 4.04%, a borrower needed income of $79,181 according to HSH.com. The average salary to afford an average home in Colorado based on a 30 year mortgage with 10% downpayment is $92,768. The mortgage industry has held fast to one standard in that your monthly house payment can’t exceed 28% of total household income. Prospective home buyers continue to face headwinds such as chronically low inventory and rising mortgage rates which also drive up costs.
Unless incomes start rising at a faster pace in Colorado, more prospective home buyers can find themselves priced out of the housing market.
Again another reason that most Denver renters are searching for greener pastures.
The good news for Colorado is that most Denver renters that plan to move in the next 5 years are searching to live somewhere else in Colorado. They love Colorado. They just don’t like the high rent costs in Denver, nor the traffic, construction and lack of parking. Most will look to relocate along the Front Range including Ft. Collins, Boulder, Greeley and Colorado Springs but many will also look at relocating to the Mountains and Western Colorado.
According to the Associated Press, the latest population forecasts also show the northern and western parts of Colorado will claim larger shares of the state’s population as Colorado adds 3,000,000 new residents over the next 35 years. The Denver Post reports the State Demography Office predicts Greeley, Ft. Collins and Western Colorado will grow by 2/3rds while Colorado Springs will overtake a built-out Denver as the state’s largest city by 2050.