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The Denver Metro Rental Market: A Landlord’s Mid-Year Briefing

by with No Comment The Investor Review

The Denver rental market in mid-2025 is characterized by increased tenant options and a landscape that demands strategic adjustments from landlords. Understanding the nuances of current rents, vacancy rates, and tenant preferences is crucial for optimizing property performance.

Current Rent & Vacancy Snapshot: More Options for Tenants, A Shifting Landscape for Landlords

  • Average Rents & Recent Shifts: As of early May 2025, the average rent across all property types and bedroom counts in Denver stood at $1,950 per month. While this represents a minor $6 increase from the previous month, it reflects a substantial year-over-year decrease of $239. This cooling trend is mirrored statewide, with theaverage Colorado rent at $1,981, down $249 year-over-year. This broader downward pressure compared to the peaks of previous years impacts revenue expectations and necessitates careful pricing strategies.
  • Property-Specific Rents (Q1 2025): Landlords need to benchmark their properties against specific market segments. Data from Q1 2025 provides a more granular view:
  • Studio Apartments: Averaged $1,484/month.
  • 1-Bedroom Apartments: Averaged $1,761/month.
    • Other sources place 1BR rents slightly higher, around $1,818 or $1,935
  • 2-Bedroom Apartments: Averaged $2,318/month.
    • City of Denver median rent for a 2BR apartment was reported lower at $1,653, highlighting potential differences between city core and metro averages.
  • 2-Bedroom Houses: Averaged $2,358/month.
    • This is notably close to the average for 2-Bedroom Apartments, indicating similar demand or value perception across property types.
  • 3-Bedroom Houses: Averaged $2,966/month.
  • 4-Bedroom Houses: Averaged $3,788/month, driven by strong family and corporate demand.
  • Vacancy Rates – A 15-Year High (for Apartments): A defining characteristic of the early 2025 market is the elevated vacancy rate in apartments. The Denver metro apartment vacancy rate reached 7% in the first quarter, the highest level seen in 15 years.
    • Within Denver County itself, the rate climbed even higher to 7.7%.6 Some data sources, like CoStar, reported a record peak vacancy of 10.9% in Q4 2024. This surge in vacancy is largely attributed to a significant influx of new apartment construction, with estimates of around 20,000 new units delivered in 2024 and over 6,000 more coming online in Q1 2025 alone.  
    • This contrasts with suburban markets like Douglas and Jefferson counties, which reported vacancy rates under 6%, indicating tighter conditions and less direct competition for landlords there.
    • The high apartment vacancy rates – particularly in downtown Denver which saw a concentration of new builds – mean apartments face increased competition for tenants. This doesn’t necessarily mean landlords of single family (or non-apartment housing) face the same competition, but it could have some downstream effects on those rents if more tenants flock to less expensive apartments.
  • Rent Declines & Market Reactions: The increased supply and vacancy have inevitably led to rent adjustments.
    • Compared to the previous year, Denver County’s median rent dropped by 5% in Q1 2025, with the broader metro area seeing a 3.6% decline according to the Apartment Association of Metro Denver. This aligns with reports noting the first annual multifamily rent decline (-2.7%) since the Great Recession. Denverite observes that when vacancy surpasses the 6% threshold, property managers typically become less aggressive with rent increases and may even offer reductions to attract tenants.
  • Rebound expected beyond 2027: New construction for apartments has been dwindling since 2022. As the remaining projects are projected to wrap up around 2027, expect another supply crunch for housing across the board with almost no new construction planned beyond 2027.
    • Most projects take 2-5 years just to break ground – so it’s likely housing supply will remain constrained well into the 2030’s assuming we get any sort of economic recovery in the next few years.  

The confluence of these factors – declining average rents, historically high apartment vacancy, and subsequent market reactions – does indicate a market that temporarily favors tenants. However, this situation appears to be a market correction driven by a supply boom in apartments, rather than a fundamental collapse in rental demand. 

Underlying demand remains robust, evidenced by strong net absorption figures (over 9,000 units absorbed in 2024, and 9,600 units in the 12 months leading into early 2025) and continued population growth, with the Denver metro area adding ~84,000 residents between 2020-2024.

Critically, the pipeline for new construction is projected to slow dramatically. Forecasts anticipate new unit deliveries falling to around 7,900 units in 2025 and further to around 3,600 units in 2026 – beyond that, there is essentially nothing else planned. This projected constriction in new supply, coupled with sustained demand, suggests the current tenant-favorable conditions are likely temporary. 

In the interim, it might be best to hold off on rent increases in 2025 and evaluate carefully in 2026 if you don’t want to lose your best tenants. Be prepared to keep up with a fast moving market beyond that though. 

I remember what it was like trying to rent after college in 2011-2013 or ‘14. Lines around the block, bidding wars happening at the front door…it was pandemonium. 

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The Real Estate Review

April Showers Bring… More Listings? Your On-the-Ground Market Update!

by with No Comment The Real Estate ReviewTop Posts

The Real Estate Review | May 2025

Boots on the Ground

Well, April certainly kept us on our toes, much like a classic Colorado spring day – one moment it feels hot with buyer energy, the next there’s a chill of uncertainty. The big headline? Inventory is definitely on the rise. We saw a significant jump in active listings, up over 22% month-over-month and a whopping 71% compared to last April! New listings also increased, adding more options to the market.

What does this mean when you’re out in the field? Buyers have more choice than they’ve had in a long time. This increased supply, paired with buyers being a bit more cautious due to fluctuating rates and economic whispers, means properties are generally taking longer to go under contract.

Despite the inventory surge, the overall median close price for residential properties nudged up slightly month-over-month and year-over-year.

This isn’t the market crashing; it feels more like a stabilization after the intense appreciation of recent years. However, it’s a nuanced picture – while some truly special or well-priced homes are still seeing multiple offers and selling quickly, others are sitting. This inconsistency means every listing needs to earn buyer attention.

For sellers, this is a competitive environment. Setting realistic expectations is key. Condition, staging, and strategic pricing aren’t just buzzwords anymore – they directly impact whether a home stands out or gathers dust.

For buyers, while there’s caution, there’s also opportunity. More inventory means less frantic bidding wars on many properties. The key is helping clients stay focused on their long-term goals and financial position, rather than getting caught up in daily headlines. With many sellers offering concessions, there are opportunities for smart negotiations, potentially helping with affordability.

In short, the market isn’t a simple “buyer’s” or “seller’s” market right now. It’s a strategic market. Success comes from understanding the hyper-local nuances, educating our clients with realistic data, and tailoring our approach to each unique situation.

Are you or someone you know ready to navigate this strategic market? Let’s connect and discuss how to best position yourself for success in today’s environment.

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Financing Snapshot

Today's Mortgage Rates
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Mortgage rates saw some relative volatility in April with the market reacting to economic uncertainty surrounding Trump’s tariff policy. While the initial reaction was fairly pronounced – moving the average 30 year rate from just under 7% to around 6.6% in a single day – it was actually pretty tame compared to the volatility we saw in 2022 and 2023.

Since these waters are relatively uncharted, the market took more of a wait and see approach returning rates to basically the same levels they were prior to “Liberation Day” when the new tariff policy was announced. From here, movement will rely heavily on economic data and reaction from the Fed, which is remaining steadfast in their position of keeping a lean balance sheet with no plans for reducing the fed funds rate.

The magic number for mortgage rates seems to be about 6% or lower based on what we saw in September/October of last year. Whether we see those rates again this year is anybody’s guess but anyone holding out on a purchase or refi will want to react quickly as it’s not likely to stick around if/when it does happen.

Market Insights

We’re starting to see some of the pressure from higher inventory levels seep into the data – something I think will become more pronounced through the rest of this year. With much of the active inventory still lingering on the market, price reductions and days on market won’t be recorded until those homes start to sell and close.

Once that starts to happen, we may see some downward pressure on prices – ending the year either flat or slightly lower than where we started. Most headlines will read with doom and gloom (when do they not?) but there’s opportunity in every market.

The way I see it, this is a rare opportunity for buyers to have an abundance of choice and the ability to walk into negotiations with the upper hand. Those willing and able to find the workarounds now will be much happier long term than those who settle after losing out in 15 bidding wars when the market shifts again.

One thing is certain, this kind of market isn’t going to last forever and all of the factors hindering housing supply are getting more pronounced by the day. State and local government are marching forward with housing policy that does nothing but exacerbate the issue, builders are slowing down production, costs for materials and labor are continuing to rise rapidly, etc…simply put, supply is not being added and when demand eventually recovers – which it will – competition for housing will be fierce and the cost of living will be pushed higher at rapid pace.

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