An influx of residents overwhelmed supply is contributing to huge rent increases.
Metro Denver apartment rent inflation has outstripped income gains by a higher margin than in any other major city in the U.S. since 2009, according to a study from Clever Real Estate subsidiary Real Estate Witch.
From 2009 to 2021, rent growth outpaced income growth in 46 of the 50 largest U.S. metros, with only Providence, R.I.; Buffalo, N.Y.; Cleveland and Pittsburgh able to keep housing costs in line with wage gains.
Nationally, median monthly rents went from $817 in 2009 to $1,163 in 2021, a gain of 42%. Denver’s gain was 82%, going from $856 a month to $1,554. That jump, almost double the pace experienced nationally, was second to only San Jose, the hub of California’s Silicon Valley, where monthly rents went up 85%, from $1,360 to $2,511.
Seattle; Portland, Ore.; San Francisco; Nashville; and Austin, Texas, were other heated rental housing markets. Rounding out the top 10 were Salt Lake City, San Diego, and Los Angeles.
A big difference between Denver and San Jose, however, was that median incomes didn’t keep pace with rent inflation, rising 48%, well short of the 82% gain in apartment rents. Denver rent gains outpaced income gains by a 71% margin, putting it among a camp of seven major metros where rent gains outstripped income gains by 50% or more.
After Denver, Las Vegas had the next biggest gap at 57%, followed by Charlotte, N.C., at 56%, Seattle at 55% and Atlanta at 53%.
But the study wasn’t entirely bleak. Denver rent gains are moderating, growing 4.9% between 2022 and 2023, which ranks 36 out of 50 metros.
Rents have skyrocketed, but the rent-to-income burden of 21.1%, up from 17% back in 2009, isn’t too much higher than the 20% burden measured nationally. That 21.1% ratio remains below the 30% rate recommended to avoid being “rent burdened.
That said, people with higher incomes are more likely to own their homes, which skews the numbers. Renters are likely more burdened than what Clever captured in its study, and Denver renters are more burdened than they were back in 2009.
“The rent-to-income ratio surged the most in Denver, followed by Seattle — two cities where recreational cannabis consumption was first legalized, increasing demand for housing among marijuana migrants from other parts of the U.S.,” said Jaime Dunaway-Seale, in comments accompanying the report.
The change in Denver’s rent-to-income ratio was the largest in the country at 23%, followed by Seattle at 19%.
