New National Study Shows that Rent Control Would Have Devastating Economic Impact on Denver Economy
Date postedJanuary 8, 2020
National Model Shows that Denver Would Lose Estimated $462 Million in Property Value and $3.5 Million in Tax Revenue
Denver (January 8, 2020) – Denver area population has grown dramatically faster than construction of new housing units. Just under 500,000 new people have mover to the Denver metro area since 2009. Approximately 124,000 new apartment units have been constructed. As a result, the cost of housing in Denver has increased significantly. The median price of a home has increased from $220,000 to $450,000 since 2009 (104.6% total increase). The average cost of renting an apartment has increased from $820 to $1,410 7.6% per year (a total of 70.6% total).
This growth in housing cost leads some to consider various versions of rent control as a method of holding down housing costs.
A new study by the National Apartment Association that examined the impact even a 7% rent cap would have on four metropolitan areas, including Denver, highlighted the devastating effect that rent control would have on the housing market.
According to the analysis, conducted by Capital Policy Analytics, the impact of imposing a 7% rent growth cap in Denver would equate to a $462 million decrease in property value and a loss of $3.5 million in property tax revenue. In addition, such a rent cap could lead to a decrease in new apartment supply of 9,348 by 2030. Even worse, a seven percent rent cap would put 35,163 units at risk through 2030 due to decreased maintenance.
“This analysis shows that these policies decrease the housing supply, harm the condition of existing housing stock and lower property values, which leads to lower tax revenues. These policies ultimately limit job growth and negatively affect local economies,” said Mark Williams, executive vice president of Apartment Association of Metro Denver. “While rent control may seem like a quick fix to Colorado’s
rental housing shortage, policies that limit growth like rent control ultimately harm those who most need help.”
With nearly 500,000 Coloradans calling apartments home, it is more critical than ever to use sustainable and sensible solutions to Colorado’s housing supply shortage. NAA’s latest findings, combined with 40 years of research demonstrating the failure of rent control policies, underscores the importance that lawmakers should instead look at real solutions that provide tangible benefits. Solutions that include such as lifting barriers to construction to allow the industry to build the tens of thousands of new apartments, at all price points, that Colorado needs annually to meet the current demand.