Denver’s single-family housing market, with some of the strongest home-price appreciation and fastest turnover times in the country, often gets pegged as a bubble in the making.

Zillow research director Krishna Rao argues that those looking for a bubble should instead focus on metro Denver’s multifamily rental market.

A decade ago, Denver-area builders requested about 15,500 permits per year for single-family homes. After the crash, the number of permits averaged only 6,000 a year, although it has since moved closer to 10,000 a year, still below historical averages.

By contrast, more than 31,000 multifamily permits have been pulled the past four years, a record-setting pace.

And new units are expected to keep hitting the market even though more supply means landlords are being forced to dial back on rent increases and provide heftier concessions.

Strong in-migration, especially among young adults more likely to rent apartments, justified the emphasis on apartment construction, Rao said in his analysis.

Denver County had the sixth largest increase in population of any county last year with 500,000 or more residents. It ranked eighth when it came to population growth tied to people relocating from other states, according to a Newgeography analysis of recently released U.S. Census Bureau numbers.

The shift away from ownership to renting after the housing bust also justified more multifamily. Renters, who were 47.5 percent of all households in 2010 in metro Denver, now represent 51.9 percent of the total, according to Zillow.

But Rao argues that too much multifamily inventory is hitting the market too fast, pushing up vacancy rates and driving down rents. He said oversupply will only get worse, given the long times needed to plan and complete apartments.

“Taken together, all of this suggests that while demand so far has been sufficient to absorb those units that have already come online, it may be stretched to accommodate the tens of thousands of units builders are planning to deliver over the coming years,” Rao said.

Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or @aldosvaldi