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Mixed Effects of Repo Homes on Rental Properties in Denver

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By : Allana Castro    99 or more times read
The effects of repo homes on rental housing and commercial rentals in Denver are mixed. While a number of foreclosure properties get added to the rental housing inventory and consequently push down rental rates, the foreclosure pace has turned a lot of homeowners into renters, increasing the demand and consequently the rates for rentals.

Additionally, the risk of foreclosure has prevented a number of renters from pursuing their plans of buying homes. Frequent news about Denver foreclosure auctions are developing in them the fear that they could also default and ultimately enter foreclosure.

As of the latest report from the Treasury Department, there are 8,256 Denver homes in the Home Affordable Modification Program, indicating the relatively high number of distressed homes in the Denver-Aurora area. This number of homes at risk of getting posted for foreclosure auction for sale is discouraging a number of renters from buying a home despite the low mortgage rates and low home prices.

Home auctions in Colorado also surged in the first quarter, with 5,303 units of the 16,023 distressed homes purchased back by mortgage lenders during the quarter. Between March and April, the number of repo homes also increased from 2,141 units to 2,147.

In the first quarter, the average rate for rental housing increased slightly over the year from $1,004 to $1,036. The increase was attributed to the drop in residential rental vacancy rate to 3.1 percent, based on data from the Colorado Housing Division. The vacancy rate one year earlier was 3.6 percent while the vacancy rate in the previous quarter was 5.5 percent.

Because of the improvement in rental housing occupancy, the median rental rate in Denver in the first quarter increased to $995, up by 4.7 percent from $950 one year earlier and by 3.1 percent from $965 in the previous quarter.

On the other hand, the still relatively low prices of repo homes have encouraged a number of renters to finally purchase a home. Total house sales shot up by 24 percent over the year.
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