Here are the key points from the report about this chart:
- The region’s rental vacancy rate has been under 5% since the fourth quarter of 2014. The rental vacancy rate remained below “healthy” levels despite the addition of nearly 25,000 rental units region-wide between 2015 and 2017.7
- Average asking rents rise with inflation when the rental vacancy rate is close to or above 5%. After several con- secutive years of low rental vacancy, average rents began to rise much faster than inflation (three times faster, in fact). Had the cost of rental housing rose with inflation since 2010, the average asking rent would be $155 less per month, on average.
The full report has more info about rising rents in the Twin Cities, and how they tie to low rates of new housing construction. As the Star Tribune points out in their editorial this week, “the number of households is up 7.4 percent, compared with 5.4 percent growth in the supply of housing units. As a result, the region’s housing rental vacancy rate last year hit a record low in the modern era, 4 percent.”
The report makes more thought-provoking claims about housing policy in the Twin Cities market, including that we are at a critical point right now balancing trends with general affordability.
And at its conclusion, the report also makes the argument that market-rate construction will not be enough to meaningfully change the Twin Cities affordability picture.
The authors write:
More units alone will not ease the region’s growing housing affordability issues. The largest unmet demand within the region’s housing market is for housing that is affordable to low- and moderate-income households. In 2006, the Council estimated the region would need an additional 52,000 units of affordable housing to meet the existing demand between 2011 and 2020.8 With the decade quickly coming to a close, the region is woefully behind, adding just over 7,000 units as of 2016 (gains that are likely offset by losses of unsubsidized affordable units). In other words, increasing production will only take the region so far. Pairing increased housing production with intentional strategies to prioritize equitable development that meets the region’s most pressing demands is most likely to support the region’s livability in the coming decades.
The report seems to suggest a “both/and” approach to the affordable housing problem, both boosting rates of new construction while coming up with policies that might help people struggling with stagnant wages at the lower end of the income spectrum.
What might those policies look like?