Denver Post – Metro Denver experienced one of the biggest jumps in the nation in households renting instead of owning — something even a robust recovery from the recession couldn’t prevent.
In 2006, 31.9 percent of all Denver-area households were renting. But by 2014, 37.8 percent leased rather than owned, according to ananalysis from Trulia, an online source of real estate listings and data.
“Housing markets with larger spikes in foreclosures during the crisis were more likely to have larger jumps in renting,” said Mark Uh, a data scientist with Trulia.
Although Denver wasn’t hit as hard by foreclosures as places such as Phoenix and Las Vegas, it ranked 13th among the 50 largest housing markets studied by Trulia for the increase in the percentage of households renting.
“We have definitely seen a huge uptick in calls from renters discussing their situations,” said Shannon Peer, director of housing counseling at Brothers Redevelopment, which runs the Colorado Housing Connects hotline.
Last decade, Peer and his staff were swamped with calls regarding foreclosures and people fighting to save their homes. Now they hear mostly from renters with questions about rent increases and people fighting evictions.
Tens of thousands of people in the region became renters after losing their homes, which investors snapped up at bargain prices and put back on the market as rentals.
More recently, an influx of young adults have moved to Denver, also lifting rental rates.
Metro Denver has one of the country’s tightest housing markets, reflected in some of the steepest gains in home prices and shortest selling times for new listings.
Now, try to imagine how much tighter the resale market would have been if so many people hadn’t moved into apartments.
“The ownership market would be even more constrained, meaning prices would have likely increased even more rapidly, without the addition of all of the multifamily product introduced in the last few years,” said Patty Silverstein, chief economist with Development Research Partners in Jefferson County.
But that constrained market has made it tougher for renters to buy. Not only are home prices rising rapidly, so too are rents, consuming a bigger piece of each paycheck, making it harder to save the down payment needed to buy a home.
In Denver, as elsewhere, wide variations exist in the groups who have found themselves renting at a higher rate, the Trulia study found.
Latinos saw the biggest jump in renting, moving from 46.3 percent of households in 2006 to 65 percent in 2014. The 18.7 percentage point jump was more than triple the overall Denver increase, and double the jump seen for Latinos nationally.
Asian and Pacific Islander households had the next-biggest jump of any racial group, with renters rising from 34.2 percent of the total in 2006 to 44.1 percent in 2014.
“Denver was similar as the trends seen nationally, with the exception of Asians having such a high percentage-point change,” Uh said. Nationally, Asian households saw only a 2.2 percentage point gain in renters.
Young adults also have found home ownership much harder to achieve, and Denver is no exception. In 2006, 47.5 percent of metro Denver households headed by adults age 26 to 34 were rented. By 2014, 61.1 percent of that demographic was renting.
Households headed by someone 35 to 54 also are more likely to rent, about 34.6 percent in 2014, up from 26.3 percent in 2006. But home purchasing definitely goes up in that age range.
Rental households headed by an adult under age 26 rose to 87.4 percent from 82 percent, but renting has long been the most common choice in that range.
Despite all the talk of empty nesters selling their suburban homes and taking up in city apartments, the share of households 55 and older who rented barely moved up to 23.3 percent in 2014 from 20.5 percent in 2006.
One of the study’s more interesting findings came when Trulia looked at renting across four income tiers. The top-tier of Denver households by income saw a 7.7 percentage point jump in rental rates, while the upper-middle tier saw a 7.8 percentage point jump.
“It probably reflects those high-earning households who lost their jobs or gave up on paying their mortgage shifting to renting, more so than it reflects ‘renter by choice’ movement,” Uh said.
Given that a much smaller share of lower-income households owned their own homes in 2006, they were less at risk of losing a home when the foreclosure crisis hit, Uh said.
Aldo Svaldi: 303-954-1410, email@example.com or @aldosvaldi