Chart of the Day: Twin Cities Rental Market Stats

Citylab published an intriguing story yesterday full of some comparative charts of the renter rates from metro areas around the country. For example, here’s a list of the top and bottom cities for rental vs. home ownership:

renter-metros-chart

 

Here’s another list showing the percentage of income spent on rent. The Twin Cities is very close to the bottom of the list:

renter-metros-chart2

It’s interesting to me because the data runs counter to the narrative about the Twin Cities’ tight rental market and rising burden of affordability for renters.

Here’s what the article’s author, Richard Florida, has to say:

Here we see an interesting pattern. Aside from L.A., the places with the highest rent burdens are Sunbelt tourist and service-oriented metros like Miami and Orlando or hard-hit Rustbelt metros like Detroit, where incomes are already low.

Meanwhile, the bottom ten includes a combination of Midwest metros like Pittsburgh and Cincinnati, alongside the energy hub of Houston, and tech hubs like San Francisco and Seattle. New York ranks 15th (with 31.5 percent), while knowledge hubs like Boston and Austin are situated near the middle, with around 30 percent.

What do you think? Do we not have enough rental housing in the Twin Cities? Is the rent indeed too damn high?


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17 Responses to Chart of the Day: Twin Cities Rental Market Stats

  1. Matt Brillhart February 17, 2016 at 11:51 am #

    Looks like the original report came from Trulia, which CityLab pretty much just re-posted, with commentary. http://www.trulia.com/blog/trends/own-to-rent/

    I think their data is referring to the enormous 16-county Minneapolis-St. Paul-Bloomington MSA, which includes 2 counties in WI and 7 additional MN counties outside of the core 7-county metro area. I really dislike MSAs and especially CSAs for statistical purposes…they’re just too big. The 7-county area is a big enough sampling area for nearly all statistical purposes…I really wish we could just stick to that definition!

    • Bill Lindeke
      Bill Lindeke February 17, 2016 at 12:34 pm #

      Yeah but it’s all relative, no? aren’t they using MSAs for each of the “cities” here?

      • Sam Rockwell
        Sam February 18, 2016 at 11:51 am #

        They have to be using something other than MSAs. San Francisco and Oakland are in the same MSA but are listed separately here. Ditto for New York City and Long Island (I’m curious to see what the heck the “Long Island Metro” is…).

    • Cameron Slick February 18, 2016 at 11:04 pm #

      Yet, Warren, a suburb of Detroit, is listed separately. Go figure!
      Less egregious but still significant because they are still parts of much larger metropolitan areas are Orange County, which is part of the LA MSA; Long Island, which is party of the New York City MSA.

  2. Matt Brillhart February 17, 2016 at 12:02 pm #

    I found this chart in the comments, looking at change in homeownership rates by age group:

  3. molly February 17, 2016 at 2:44 pm #

    I think what this tells us is that for people with sufficient means housing costs are relatively reasonable. We are a high income region with low housing costs.

    But for a lot of folks these averages are irrelevant. 29.9% of households in the Twin Cities are considered housing cost burdened and vacancy rates for rental housing are very low. Vacancy rates are particularly low for housing that is affordable to lower income households, and wages are not keeping up with the costs of rent.

    In other words we don’t have enough rental housing and the rent is too damn high.

    • Bill Lindeke
      Bill Lindeke February 17, 2016 at 3:46 pm #

      phew. i was worried about my narrative for a second there.

      • Tim February 17, 2016 at 4:27 pm #

        I think it can be both things at the same time — rather affordable for part of the population, and increasingly unaffordable for others. That’s why I think San Francisco is so low on the list. It’s certainly not because it is cheap; it is because the area has a lot of really well-paid people.

    • Catherine February 22, 2016 at 2:08 am #

      I agree with Molly. For low income folks and minorities, I believe there is a different story to be told similar to the low unemployment rate, and “best place to live” data that only references the white population of the twin cities and their stats and their standard of living in the twin cities. Recent data has shown a drop in income for African-Americans in the twin cities and their standard of living. This decrease is represented only by African-Americans within the twin cities ranking them lower in economic options than those in Mississippi. Your data is not reflective of the entire community within the twin cities. .

  4. GlowBoy February 17, 2016 at 4:55 pm #

    It’s not that rent is *cheap* here. It’s just that it’s less crazy-expensive compared to incomes than in other cities. Compared to most metros, we have higher incomes and lower housing costs.

    In my recent home of Portland, rent has skyrocketed much faster than here. As in many metro areas, there was a significant rise starting in 2008 with the collapse of the housing bubble locking many people out of the home ownership market. In the past decade Portland went from off-the-radar backwater to the new “it” city, bringing a relentless influx of new arrivals coming whether or not they could find jobs. That jacked up rents while keeping wages down.

    To make matters worse, a long-term glut of cheap apartments built in the early 1960s finally got used up. The city reacted to construction of these apartments was exceedingly strict zoning which, for nearly 50 years, almost completely prevented the construction of new units. Although the zoning has now been relaxed and for the last 2-3 years construction has been going at an insane pace, it will take a few years for the new units to age and enough newer units to be built to coax higher-income renters out of the older units.

    In other words: it could be worse.

    To me the biggest lesson is that you need to let urban neighborhoods densify: otherwise you end up pushing people further out and/or making the urban neighborhoods too expensive. There’s room for a huge number of new residents if we allow new apartment construction, concentrated along major arterials (and along side streets as well, in a few denser neighborhoods like Uptown-Wedge and Marcy-Holmes). We’re seeing this in Portland, with most of the new apartments either going up on collector streets (Division Street, Mississippi, Alberta, etc.) and a handful of denser neighborhoods like Lloyd and the Pearl. Outside of these locations very few SFHs are being taken down for apartments.

    Really, NIMBY opposition to increased density is the absolute enemy of affordable housing in the long run. And ironically, it probably suppresses their property values anyway: even an SFH in a more vibrant urban neighborhood is worth more than otherwise.

    • Rosa February 18, 2016 at 12:45 am #

      That’s exactly it! People complain about the “high end” development but it does help affordability in the long run – when I moved here, in the late ’90s, people were paying really low rents or squatting places that had been the high-end development of an earlier (’80s?) condo boom.

      we’re lucky to have the Greenway and the first light rail line go through so many formerly light industrial areas, with lots of room for new buildings that barely displace anything – in the late ’90s the north side of Washington Ave downtown looked like the zombie apocalypse already happened. Now it’s full of new buildings, many of them condos and apartments. The new mixed use buildings from Lake Street south along the light rail displaced decrepit looking but still in use light industrial, too. There’s still a ton underdeveloped along the Greenway east of Nicollet, too, including the great (if not too toxic, who knows) Roof Depot site.

      But that doesn’t mean we don’t also need more density in places that are full of SFH. I’ve been really glad to see the multiunits built in Phillips & Powderhorn recently, closer to home for me. And I have to think that if there was more public investment in Near North, including better transit, development there would do a lot for housing quality (there are so many places still not all the way repaired from the tornado, and SFH sitting empty still from the mortgage crisis) and citywide affordability.

      • Tim February 18, 2016 at 9:08 am #

        Yes, the high-end units help affordability in the long run, but it’s not like people can wait around 25 years for affordable housing, either. Plus, when there’s a lot of demand, you get situations like the Concierge in Richfield (I forgot what it used to be called), where the affordable housing gets bought up and made more expensive because it’s cheaper to refurbish an existing building than buying a new one. There need to be solutions that address the current situation as well, such as mandating that a certain percentage of units in new construction be affordable to a certain income level.

        • Elliot Novak February 18, 2016 at 2:40 pm #

          Concierge used to be Crossroads at Penn.

        • Rosa February 19, 2016 at 6:35 pm #

          Or some other smoothing mechanism, like the city or county building more affordable housing even when there’s not an immediate crisis (since when rents are high, more gets built on the private market already).

          Changing the zoning/permitting/unrelated tenants rules in neighborhoods with big SFH that aren’t really viable as SF rentals, like Ventura Village and parts of Phillips, would help immediately, too. Or at least give those tenants safer housing and more rights, where the rules are already being broken but complaining just gets you evicted because your tenancy is illegal.

  5. It's not that bad February 17, 2016 at 8:47 pm #

    When I moved from Minneapolis to Boston my rent more than doubled (my income did not). Rents might be rising quickly in Minneapolis, but take a quick comparison in Craigslist and you’ll feel better about the situation! To top it off, rental real estate in Boston is locked down by smarmy realtors, so you generally have to pay the equivalent of one month’s rent to the realtor (plus a security deposit and first month’s rent) to get into an apartment.

  6. Adam Miller
    Adam Miller February 18, 2016 at 8:19 am #

    That sure makes it sound like we need more rental units.

    We have quite a bit of policy in play to help people become homeowners. I don’t think we need more.