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Twin Cities Rents at Risk of Rising
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<br />Attachment I
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<br />Aboiu�t INUIl"W lllbgs
<br />Blogls MHP" Connect T'wiin Cities IEelnts at IRislk of IEiisiing
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<br />Twin Cities Rents at Risk of Rising,
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<br />Mn DONJ%31 NOW
<br />Aug 17 J1 15A8
<br />If you've been foillowiing the rental market in the Twin Cities,, you probably saw the headlines about a month
<br />ago that apartment vacancy rates, dove down to 2.4% last quarter- a low not seen in many years,. To find out
<br />just how long it's, been, MHP looked to the hils,toirical data of Marquette Advilsoirs, (formerly G,VA Marquette).
<br />What we found when we pIlotted the data surprised us,, and spells, concern for rental affordability.
<br />EveInts
<br />TWIn 0199 Average Rents and W cy Rafts,, 1996-2011
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<br />First, looking at the data over the last fifteen years,, vacancy rates have hit both high and low notes, ranging
<br />MM Connect: How to
<br />from 1.1% in the middleof 1998towell over 7% iin2003 and 2OO4and again in 2009. Yet average rents have
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<br />sung a different tune: they have risen or stagnated, but haven't usually fallen much, even during times, of high
<br />vacancy rates,. (The one-quarter exception was in late in 2008 as the recession hit.)
<br />Secondly, ecoinomiic trends, have an enormous, impact on the rental market. Whether the 1990s boom years,
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<br />the rise and bursting of the home ownership bubble, or the recent reces,s,iion, each one makes fits , mark in the
<br />MHIP Connect was formerly known as
<br />rental market. Here's a rundown of the trends,.
<br />The BUIlefin.. Access back 1SSUes of The
<br />Bulletin here..
<br />• 1990s through 2000: Tremendous economic expIans,iion fueled a shortage of workforce housing and
<br />high demand for rentals, with oingoliing low vacancy rates, and rising rental costs,.
<br />• 20011: A miild reces,siioin iin March-NlovembIer 2001 drove down rental demand.
<br />• 2002-3: In 2002 vacancies rose with a post- recess iioin recovery, as they often do, before economic
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<br />improvements filter down to individual level. The upscale rental market built up iin previous, years, saw
<br />significant vacancy as "favoirable" homebIuyer mortgages become available.
<br />• 2003-6: Massive numbers of people floicked to home ownershiipI, riding the housing bubble wave of easy
<br />credit and little money down. 2005-6 marked the peak years, for homeownership. However, rental
<br />vacancy rates, fell, with strong job growth causing rental demand to rise. Some rental units were
<br />converted to condois, trimming supply.
<br />• 2007: Housing bubble crash iin full force. New construction fell- rental supply tightened some.
<br />• 2008-9- Great Reces,s,iioin; rental market slackened dramatically. Many families and singles, that would
<br />otherwise have been living on their own dolubIled up. Many young people delayed forming independent
<br />households. (Meanwhile, foreclosures, contiinued.)
<br />• 2010-Present: With limited ecoinomiic recovery, the great backlog of rental demand rears fits head. Tens
<br />of thousands of foreclosed former homeowners seek new housing, and a backlog of households form or
<br />mortgiage more Volume
<br />leave doubled up situations. Very limited multi-family coin struct iloin since 20016 (see page 3) cointrilbutes,
<br />to tight
<br />hou s iIng funding providles
<br />rental supply.
<br />Issue pro gIra MS assistance
<br />Development public homes that
<br />http://www.mhponline.org/mhp-bIogs/mhp-connect/226-twin-cities-rents-at-risk-of-rising 09/141/2011
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