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01-22-08 1B Market Study
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01-22-08 1B Market Study
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1/18/2008 11:19:37 AM
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1/18/2008 11:17:07 AM
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Market Study by Maxfield Research
General - Type
Agenda Item
Date
1/22/2008
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<br />RENTAL MARKET ANALYSIS <br /> <br />Introduction <br /> <br />This section provides an assessment of rental market conditions in the Arden Hills Housing Mar- <br />ket Area. <br /> <br />Twin Cities Rental Market Overview <br /> <br />While the Arden Hills Market Area has its own employment base that drives housing demand, <br />much of its housing growth is tied to the health ofthe Twin Cities Metro Area as a whole. The <br />market rate apartment vacancy rate in the late I 990s and early 2000s was very low throughout <br />the Twin Cities. Just as new apartments were being added to accommodate potential renters, the <br />nationwide economic downturn in 2001 resulted in a sharp increase in vacancy rates. Low mort- <br />gage interest rates and easy financing also pushed many traditional renters into homeownership, <br />decreasing rental demand further. The Twin Cities rental market remained above the stabilized <br />vacancy rate of 5% until 3rd Quarter 2006, when it dipped to 4%. <br /> <br />The chart below displays vacancy rate trends and average rent increases for the market rate rental <br />units in the Twin Cities Metropolitan Area. <br /> <br />~ The Twin Cities Metro Area's rental vacancy rates increased dramatically between 2000 and <br />2003, when it reached a high of7%. Since then, the vacancy rate has decreased slowly and <br />was 3.6% in 2007. <br /> <br />~ The average rent increase in Metro Area apartments decreased in correlation to the rising va- <br />cancy rates. Rents in 2000 increased 7% from the previous year. However, from 2001 to <br />2005, rents remained stable, increasing less than I % each year. In 2007, as the vacancy rate <br />fell to 3.6%, average rents rose by 2.7% over 2005. <br /> <br /> <br />MAXFIELD RESEARCH INC. <br /> <br />50 <br />
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