DENVER – An imbalance between job creation and housing construction is contributing to increasing rents in the Denver metro area, according to a new report from ApartmentList.
The Mile High City has recovered from the recession better than a lot of cities and unemployment has reached record low levels. But residential construction simply hasn’t kept pace and what little housing is available is increasingly expensive.
ApartmentList site looked at government data and building permits from 2005 to 2015 and found that Denver is sixth on its list of cities with an undersupply of housing.
The problem seems to be getting worse, as well. During that 10-year time frame, Denver produced 1.7 new jobs for every new housing permit but between 2010 and 2015, that number rose to 2.9. ApartmentList says that ideally, a city should be adding one new housing unit for every one to two jobs.
Denver-area rents rose 52 percent over that 10-year period, with a 2-bedroom apartment now renting for a median price of $1,330.
ApartmentList’s analysis shows a clear correlation between jobs per permit and rent growth not just in Denver but across the country. Cities with the largest gaps between job creation and housing construction also saw the biggest increases in rent between 2005 and 2015.
Unsurprisingly, San Jose and San Francisco are the two most “undersupplied” metro areas in the country, with many more jobs being created than new housing.
Here are the top 10 most “undersupplied” metros, according to ApartmentList’s analysis:
1. San Jose, CA
2. San Francisco, CA
3. Boston, MA
4. Salt Lake City, UT
5. San Antonio, TX
6. Denver, CO
7. Dallas, TX
8. New York, NY
9. Austin, TX
10. Seattle, WA
Conversely, several major cities have the opposite problem, with housing construction outpacing job creation. Detroit, Mich., which has struggled with economic issues for years, tops the list of most “oversupplied” metro areas:
1. Detroit, MI
2. Cleveland, OH
3. Providence, RI
4. Birmingham, AL
5. Memphis, TN
6. Virginia Beach, VA
7. New Orleans, LA
8. Tampa, FL
9. St. Louis, MO
10. Milwaukee, WI
Nationwide, ApartmentList found the number of U.S. households grew by 11.2 million between 2005 and 2015, while only 9.9 million new housing units were built.
To read the full report, log on to apartmentlist.com.