Chart of the Day: Twin Cities Rents Versus Vacancy

MPR News published an excellent article yesterday about the lack of housing for people with Section 8 vouchers. It contained this eye opening chart about the state of the rental market in the Twin Cities these days.

Here’s a quote from the piece:

Voucher holders usually have just a few months to find an apartment to rent before the housing agency takes it back and gives it to the next person on the waitlist. That’s why Douglas spends a lot of her free time looking for housing for other people, even though she rents a townhouse she loves in Brooklyn Park.

“I’ll just do some housing searches and every time I find someone, I’ll call them myself and ask them and then I’ll post it in the group for someone,” Douglas said. “We’ve had a few people who’ve found a place in there and they’ll come back and say ‘I found the place thank you!'”

Douglas has had a voucher for nearly 20 years. She does temp work now as a home health care aid but would struggle to afford rent for her and her daughter. Back when she first got her voucher, she said she found an apartment in a month.

“It was really easy back then to get a place with Section 8. Some owners were like, ‘if you don’t have Section 8 we’re not going to rent to you because it’s guaranteed rent,'” Douglas said. “But now, times have changed.”

Douglas almost lost her voucher before because she couldn’t find a place to rent.

A few years ago, Douglas had to move because her apartment failed the annual inspection. It had broken locks and mold that made her and her daughters sick. She only moved into that place in the first place because her voucher was about to expire.

“If you lose your voucher you’re homeless,” she said. “You just don’t have nowhere to go.”

The article also makes the counter-intuitive claim that policies like requiring landlords to accept Section 8 might not help the situation.

he “housing crisis” continues to get worse in the Minneapolis-Saint Paul metro. Check out the whole article for more on this critical issue.

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7 Responses to Chart of the Day: Twin Cities Rents Versus Vacancy

  1. Tom Quinn July 19, 2018 at 1:45 pm #

    The chart raises more questions than it answers. First off, is the rent data inflation adjusted? Secondly, I would have expected to see some correlation between vacancy rate and rent, but I don’t see it.

    What are the factors that account for the rent increases? Is it mostly increased building costs for new units? More amenities? Increased taxes? It sure doesn’t look like increased demand.

    Lastly, how does the average market rent compare to the mean market rent? Are the numbers skewed by a small number of very expensive new units?

    • Chris Moseng
      Chris Moseng July 19, 2018 at 3:45 pm #

      When I look at that chart I see a pretty clear correlation: when vacancy is high, rent increases are slow or nonexistent, and when vacancy is low, the the slope of the rent line gets steeper.

    • Joseph Totten
      Joseph Totten July 19, 2018 at 4:13 pm #

      I’d prefer a chart for Vacancy Rate vs. Change in Rent to better highlight this, and it might lead to a more striking visual. That said, from 2001-2010, vacancy rates were around or above 5% and the median rent rose by very little (under $100 at most), when rates are under 5% for a sustained period then the rent goes up quickly.

      Skipping the 2nd paragraph’s questions, since it does look like to me it is increased demand (lower vacancy).

      Average market rent is almost always the median rent, so adding 100 super luxury apartments would be equivalent of adding 100 apartments that were $50 over average market rent.

    • Daniel Hartig
      Daniel Hartig July 20, 2018 at 8:38 am #

      It looks like that in times of low vacancy, rents rise, while in times of high vacancy, rents do not rise.

      Intuitively, this makes sense. Rents aren’t going to drop over a 1-2 year period, because many landlords will be able to eat the losses associated with not having a tenant over those times spans instead of setting a precedent with lower rent. Most people will have the business sense to make this so.

      Rents won’t go down unless you have a Cleveland situation where there is a 40% vacancy rate for 20 years.

      • Anon July 23, 2018 at 12:15 pm #

        I can see why this would be true for multi-unit housing. Landlords don’t want tenants in comparable units to see other’s getting a discount.

        I rent single units and the rent is different each time I rent the same unit. Vacancy hurts my bottom line much more than lower rent so sent rent to get a Tenant moved in fast. So for me, (and presumably simularly-situated landlords) rent is very, very responsive to demand. I’m not sure what market-share small-timers like me have, perhaps not enough to move the market.

  2. Daniel Herriges July 21, 2018 at 9:09 am #

    Here’s the chart you guys want: https://postimg.cc/image/8r14oyzgr/

    Zero effort was made to make it pretty – I just manually input the values in Excel, but you can see that there is a pretty clear correlation between year-over-year rent increase and vacancy rate.

    • Daniel Hartig
      Daniel Hartig July 23, 2018 at 12:44 pm #

      Excellent work!

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