The Rent is Too High

Though I’m no economist, I have a theory about inflation. The “general increase in prices and the fall in the buying power of money,” commonly known as inflation, has been dominating financial news for several years. Even now, as prices drop and inflation cools, economists and pundits and politicians are talking about the causes of inflation and how to ease it. Well, I have some suspicions about what is causing the most recent wave across the Denver metro area and the country at large.

It’s the landlords’ fault.

Landlords cause inflation. Property speculation with a specific focus on rental properties leads to an increase in prices that is not specifically related to other market forces. When taxes and utilities and repairs do not cost more, but rents rise dramatically, there can be only one answer. Basically, landlords are raising rents simply because they can. The astronomical rent increases across Colorado in the past ten years are personal choices by landlords, as opposed to any other relative increase in costs.

Because housing costs are the highest percentage of most individual budgets, renters can easily be priced out of access to shelter. That disproportionate cost of housing is nowhere more evident than in the mountains, especially Summit and Eagle counties. Resort communities have long passed the time when local residents and service workers could afford to live there. This disparity has led to communities such as Breckenridge taking action to build affordable housing specifically for resort workers. While that’s an admirable idea, it would be unnecessary if landlords in Summit County were not gouging renters by raising prices to unsustainable levels.

A similar conundrum can be found in communities across the state where public employees, specifically teachers, are unable to afford housing. Granted, the demand side of the equation obviously lends to the increase. As popular areas draw increased desire to live there, landlords can easily increase prices, and that often means forcing one renter out in order to charge a new renter more. Now, clearly, in a capitalist free market economy, it is the right of any business owner to make as much money as possible. That said, there are residual effects that are not healthy for individuals, communities, and the economy overall.

The average rent for a one-bedroom apartment in the Denver area is $1700, a 50% increase over ten years. Clearly, other costs have not risen 50%, certainly not taxes and utilities. Thus, rent increases came simply because landlords could charge more and did. The problem is the residual effects. If housing costs more, employers are pressured to pay employees more, so they can afford to live where they work. That irrational rise in wages subsequently leads to product prices increases – hence inflation. It all happened because landlords started raising rent simply because they wanted to and could.

When my wife and I first moved to Greenwood Village twenty-one years ago, we loved many local independent businesses, and we particularly enjoyed shopping at Cooks Fresh Market in Belleview Promenade. We would often pop in for picnic supplies on weekends or pick up deli selections for weeknight dinners. Sadly, we heard the popular store was forced out of its location by rent increases, but fortunately found a prosperous location on the Sixteenth Street Mall. Cooks Fresh market closed permanently last year, but they had a great two-decade run in downtown Denver.

I’d imagine a new Denver landlord killed the business just like one did in Greenwood Village years ago. Denver has recently seen a rash of business closures, specifically independent restaurants, due to rent increases and relative wage increases. What’s particularly sad is these closures have come post-pandemic when the economy has recharged. In Greenwood Village, we’ve lost mainstays like Tokyo Joe’s and the Starbucks at Belleview Square, and word is those exits were forced by unreasonable and inexplicable rent increases by Regency Centers.

I’ve lived in the same duplex house for two decades, just a short walk from Cherry Creek High School. The other townhouses in my neighborhood rent for two-and-a-half to three times my monthly mortgage payment. In all honesty, that is simply ridiculous. What’s particularly troubling is that many housing units are being bought up by hedge funds and foreign-owned investment companies. They have no connection to the community and no concern for residents. They just raise rents because they can.

Simply put, as the single-issue political party in New York says: “the rent is too damn high.”