What Exactly Do Tenants Want In A Minneapolis or St Paul Duplex?

Zillow recently released its 2023 annual renter survey. It contained some great news for mom-and-pop housing providers nationwide.

According to the 21,000 renters Zillow surveyed, 54% named an apartment as the type of property they’d most like to rent. However, they do not want to live in a huge building. Eighteen percent said they’d like to live in a building with less than 10 units, 17 percent said a building with 10-49 units, 35% preferred a single-family home or townhouse, and 6% preferred a duplex or triplex.

My hunch is the duplex and triplex number is low simply because there aren’t that many of them.

Having said that, 67% of renters also feel the property they’re living in needs updates.  Considering the vast majority of rentals in the United States are in small buildings or single-family homes, that means these types of properties, by en large, are the ones that need the most work.

This is important information because of all the new construction not only happening in the Twin Cities, but nationwide. According to Marquette Advisors, the metro-wide vacancy rate at the end of October stood at 4.2%. With thousands of newly constructed apartments set to come on the rental market this year, that number is expected to tick up. Similar to the housing market, a balanced rental market where housing providers and prospective tenants are on equal footing when there is a 5% vacancy rate. Higher vacancy rates often result in concessions to tenants and declining rents.

In fact, 43 of the 50 largest markets in the U.S. saw more rental concessions now than last year. Nationwide, at least 30% of all rental listings offered one or more concessions. The common theme found in these markets are there is a great deal of multi-family construction happening.

What are tenants looking for in a property? While affordability continues to be the top requirement, in our post-covid world, walkability is important to 61% of residents. Having services, shopping, and recreational activities matters to 56% of all tenants.

Of note – in the past, renters tended to be younger than homeowners because it takes time to save for a down payment on a house. While the majority (51%) of U.S. renters are under 40, the average age of all renters is 39.

This is actually older than the average age of a first time home buyer, who is 35.  Of those residents who haven’t moved in the last year, the average age is 41.

I can’t seem to make this math work in my head, but Zillow cites the deviation in age is a result of the decreased affordability of home ownership and tight supply of inventory.

For a copy of the complete report click here.