Expenses Rise For Minneapolis Duplex Owners

Recent reports from both YardiMatrix  and the Minneapolis Federal Reserve suggest rising expenses are not only squeezing housing providers, and may ultimately slow the development of new multifamily properties.

While both studies collected data from large apartment buildings, small multifamily housing providers face the same pressures, just on a different scale.

Yardimatrix found that nationally, overall expenses per unit rose 7.1% year-over-year. The Midwest fared slightly better, with expenses rising 6.4%.

The biggest contributing factor in this rise was of course, property insurance, which jumped 27.7% year-over-year. Marketing expenses contributed another 12.3%, and maintenance costs another 8.8%.

Nationwide, property insurance premiums have risen 129% since 2018. This is the result of large claims involving hurricanes, hail, floods and fire. The average annual cost of insurance per unit rose to $636.

The good news, however, is housing providers income generally also grew. This helped offset those additional expenses. However, the nationwide forecast is rents will increase by just 1.8% in 2024 as a result of increased supply of units.

Of course, housing providers didn’t need a study to know expenses were increasing.  Nonetheless, it’s always nice to be validated.