Record apartment rents: Catalyst to buy?

The overall average monthly apartment rent in the Denver area in the first quarter crossed $1,200 for the first time. The median monthly rent for all units also hit a record in the first quarter, according to the Denver Metro Area Apartment Vacancy and Rent Survey released on Tuesday.

The average rent in the Denver area at the end of the first quarter was $1,203.89, 12.1 percent higher than the $1,073.63 in the first quarter of 2014 and a 3 percent increase from the $1,168.65 in the fourth quarter.

For an apartment unit built after 2010, the average monthly rent was $1,649.39.

The overall average rent would be the equivalent to the principal and interest payment on a $260,000 home mortgage, amortized over 30 years with a 3.75 percent interest rate. The most expensive rent would be the equivalent of a $355,000 mortgage.

“Without a question, anyone who plans to stay in the Denver area should be planning to buy a home instead of continuing to rent,” said S. Robert August, a local housing consultant.

Both apartment rents and home costs are at record levels in the metro area, noted August, principal of North Star Synergies. However, the rental payment does not provide the tax breaks of a mortgage, he noted.

Perhaps more importantly, despite the record prices of homes, which were up 10 percent, year-over-year, according to the latest Case-Shiller report released on Tuesday, home prices are expected to continue to rise, August said.

>> See full article: Record apartment rents 1st Quarter 2015 (1)

Posted in: Apartment Investing

Comments are closed.