Twin Cities Vacancy Rates Decline

According to a report in Finance and Commerce,  Twin Cities multifamily vacancy rates continued to decline in the first quarter, dropping to 7.03% from 8.37% at this time last year.

Declining vacancy rates mean prospective tenants are competing for vacant units, which drives rents up. True to economic theory, median rents for a 2 bedroom increased $22 year over year to $1543.

As of January, 75% of Twin Cities vacancies are in apartment buildings, 8% in single-family homes and 17% in duplexes, townhouses and condos.

With half as many new construction units in the pipeline this year compared to last, there will likely be continued upward pressure on rent.

In 2018, Minnesota had 50,000 fewer housing units than the population needed. Today, that number has almost doubled, creating one of the most severe housing shortages in the nation.

Housinglink, a Minnesota-based housing search resource, reports to rent a 2 bedroom apartment, a tenant must have a minimum monthly income of $3813 (using the common screening criteria of 2.5 times the monthly rent). Individuals earning $87,000 a year could only afford one-third of the available units.

The average entry-level salary in the Twin Cities is $67,052.