Minneapolis Rent Growth Stalls

Remember rent control? As you may recall, city councils in both Minneapolis and St Paul thought the problem with the cost of housing was the price of rent. And while Minneapolis never passed a rent control ordinance, St Paul capped annual rent increases at 3%.

I bring this up because according to a report from the apartment leasing site Zumper, the median price for a one-bedroom apartment in the Twin Cities stands at $1310. That represents a drop of -5.8% drop from January and contributes to the low 1.6% annual increase over the same time last year.

In other words, if this average in its entirety was under a 3% rent increase cap, the odds are housing providers would have raised the monthly rent the full 3% to not fall behind. This means the average monthly rent would have been$1328 had it been under rent control; a difference of $18 per month.

Of course, there is another story. The two bedroom units in the Twin Cities saw an annual increase of 3.3% year over year, for a median price of $1900 per month.

In both cases, these dollar amounts appear to represent units in new construction buildings. The higher rise in rent for a two-bedroom may simply be a result of a smaller supply.

Speaking of supply, Minneapolis is slated to have 8700 more new units come into the market this year. While we haven’t necessarily seen falling rents yet, this new inventory may place downward pressure on rents by the end of the year.

If that happens, the silver lining is it’s pretty tough to pass rent control when prices are actually declining.

Like all things, only time will tell.