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Twin Cities Housing By The Numbers: MHP's "2×4" Report

The Minnesota Housing Partnership just released their latest version of their “2×4″ Report and there are some important takeaways:

3.1%

The vacancy rate of of rental units in the Twin Cities – the lowest since 2001 and well under the “balanced market” level of 5%. Vacancy rate was over 7% just 18 months ago.

$916

Average rent, up for the last 3 straight quarters.

13%

Percentage of renters in non-luxury units with past due rent – down from approximately 24% in Q2 2009.

6%

Percentage of mortgages in Minnesota that are 60+ days delinquent – down from a peak of 8% in Q4 2009.

6639

Number of homeless kids in the Twin Cities – up each year for the last 3 years.

Takeaways:

  • With the extremely tight rental market, rents are rising and will likely continue to rise until vacancy rates can climb through a building of/conversion to rentals or increasing home ownership rates.
  • In the near term, the fastest way to create rental housing units is to convert foreclosed properties into rentals, which we see happening in great numbers right now.
  • As rents increase, the rent vs. own equation improves further, which may push a few more renters to become homeowners.
  • Homelessness continues to be an issue in the Twin Cities – and is of particular concern for the youngest amongst us. ¬†Higher rents will not help matters.
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3 comments
Aaron Dickinson
Aaron Dickinson

I agree - communities will have more challenges ahead of them as a wave of new landlords tries to understand and serve this market. Ultimately though I hope that we'll end up with neighborhoods that are not 100% rental or 100% owner occupied but rather a healthy mix of the two. I have 3 rentals in my neighborhood and 2 are great - the other one has a family that just isn't considerate of their neighbors but at least they haven't trashed the house yet.

ryanl
ryanl

back when I was in the rental game 93% occupancy was optimum - 95% meant you were leaving money on the table. (rent wasn't high enough) I fear that many distressed homes being converted will be managed by inexperienced landlords who lack proper vetting of tenants creating a viscous cycle for neighborhoods and properties. $916 is still cheap for the flexibility that comes with renting.

ryanl
ryanl

back when I was in the rental game 93% occupancy was optimum - 95% meant you were leaving money on the table. (rent wasn't high enough) I fear that many distressed homes being converted will be managed by inexperienced landlords who lack proper vetting of tenants creating a viscous cycle for neighborhoods and properties. $916 is still cheap for the flexibility that comes with renting.

Disclaimer

TwinCitiesRealEstateBlog.com is not a Multiple Listing Service MLS, nor does it offer MLS access.
This website is a service of Aaron Dickinson of Edina Realty, a broker Participant of the Regional Multiple Listing Service of Minnesota, Inc.