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Denver Rent is On the Rise

Recent reports indicate that the average rent for those living in Denver has gone up by approximately 4.4% from 2012 to 2013. Though some might be frustrated by this increase in the overall cost of living, the rise in home rental prices also points to a positive shift in the economy as a whole. The reasons for the recent increases are varied, but all are connected to larger economic shifts.

Supply and Demand

On one hand, rental prices in Denver have increased lately largely due to the basic laws of supply and demand. In other words, there has been a corresponding increase in people looking to rent, which has diminished the number of available apartments. As a result, landlords and apartment managers have been able to gradually raise monthly rent costs without losing any applicants or tenants.

Improvements to the Job Market

While supply and demand is perhaps the immediate reason for the increase in Denver rental prices, at least in terms of economic theory, there are also other factors at place in these changing home rental prices. For example, the increase in renters has much to do with the improvements in the job market. With job growth in Denver approaching 3% this year, people are in a better position to rent—and they are also in a position to pay more, thus providing little incentive for landlords to bring rental prices back down again.

Desire for Flexibility

Though the job market is improving, it is by no means completely stable yet. Thus, many people want to ensure they have some flexibility with regard to their living situations in case they need to relocate for a new or better job—which presents yet another reason that rent prices in Denver have gone up in recent months. The employment rate has gone up enough to make rent affordable for a wider range of people, but some people are not confident enough in its stability to invest in a mortgage.

What Rent Increases Means for You

Though the home rental prices have not increased enough to cause much alarm (or to slow the rate at which apartments and houses are being rented in Denver), the rate changes should be some cause for reflection. Many people rent in order to save money, at least in the short term, since buying a home requires a more significant upfront investment. Yet if rental prices continue to rise, it might be prudent to consider whether buying might be the more economical option. After all, mortgage prices are still low enough that a monthly loan payment on a home might be close to what you’re paying in rent.

In sum, if you’re shopping around for a rental in the Denver area, don’t be alarmed if the monthly rent costs are higher across the board than they were a year ago—or even a couple of months ago. Despite the inconvenience this may seem to cause, the important thing to remember is that this signals an improvement in the job market and a gradually increasing confidence in the economy.