DENVER — It’s the first of the month and renters know that means they have to pay up, and many of them notice they’re paying more and more–especially over the past two years.
The Colorado Division of Housing confirms rental rates are on the rise as vacancies are dropping. It all comes down to basic economic principle of demand exceeding supply.
Anthony Overland says he is being forced to move from his two bedroom Dakota Ridge apartment in Littleton because his rent is increasing from $770 a month to more than $1,100.
“I was shocked. I can’t honestly see how to justify a $400 increase. You’re looking at a 40 percent rate raise, with really no explanation,” says Overland.
He says the property manager told him that is the current going rate.
So Overland is buying a new condo that is just a mile away.
“An extra bedroom… I probably picked up an additional 300 to 400 square feet and my payments are less than what my rent is currently,” he says.
The Colorado Division of Housing says rents statewide are up more than three percent from last year.
The Fort Collins-Loveland area is the worst, with an increase of more than nine percent.
According to the division of housing, the biggest problem is there are not enough apartments to meet the demand.
“2008, ’09, ’10, ’11 have been quite slow years in terms of new apartment construction,” says Colorado Division of Housing spokesman Ryan McMaken.
Last year the housing industry added just 1,146 apartment units in metro Denver–a big jump from the 298 units built in 2010–but significantly less than the 2002 boom when more than 9,000 units were built.
Colorado’s popularity also contributes to the problem. About 20,000 people move into Colorado each year.
“People are here. They’re staying here. It’s difficult to add a lot of apartments at once and they’re not buying houses, so they’ve got to rent something. So that really is pushing up the demand right now,” says McMakens.
The state says the industry will add more than 10,000 units during the next two years, but it will take more than a year for people to move in and feel any sort of rent relief.
“I get a tax break,” Overland says, now that his rent money will go instead to paying off his new mortgage. But the benefits don’t end there. “It’s a bigger place for my son.”
Besides buying, Colorado’s Division of Housing says some people are dealing with the higher rents by taking on roommates.
The agency also says renters generally have to move into lesser quality apartments if they want to pay less.