Housing construction is booming in Minnesota. Yet much of that new construction is likely to be out of reach for low-income Minnesotans in need of homes they can afford, finds the latest 2x4 Report, released today. The 2x4 has also been redesigned with updated content with this release.
From the data in this June issue, several industry indicators spell good news for current owners and developers. However, the report is a reminder that renters and the homeless are still struggling, as average rents crossed the $1,000 mark in the Twin Cities for the first time, and homelessness for students rose higher.
Construction of homes and apartments is up substantially compared to just a year ago, according to data on building permits. This held true for both single-family units (up 44%) and multi-family units (up 68%). For units in multi-family buildings, 1,304 permits were issued in the first three months of 2014, the highest in over a decade for the time of year.
Also positive for the industry is a limited supply of homes on the market in three of four metros (Duluth, Rochester, and the Twin Cities) portending more construction to come. Falling mortgage delinquencies is another piece of good news for all parties.
However, average rents in the Twin Cities rents crossed the $1,000 threshold, driven up in part by new high-end apartment construction. At this rent level, a household would require an income of $40,000 to afford this home without paying over 30% of income for housing. This price is out of reach of most Twin Cities renter families.
The report also found rising homelessness for school children, with 8,300 students identified as homeless across four districts this school year, up 5% compared to last year.
As the cost of housing rises, renters with limited incomes are facing an ever more serious shortage of apartments affordable to them. For apartments renting for under $1,000 per month in the Twin Cities, the vacancy rate fell to only 2.2% last quarter, even as the overall vacancy rate moved up to 2.7% from 2.5% last quarter.
For the 2x4 press release, Chip Halbach summed up analysis of the findings: "Housing construction is important for the prosperity of Minnesota communities, but we need to be sure that lower income Minnesotans also have safe places to live at prices they can afford. When residents cannot afford basic needs, families and communities struggle."
Changes to the 2x4
Back in 2009, as the housing market was in the midst of rapid change, MHP developed the 2x4 to convey information about housing in Minnesota in a timely and easy to access and understand format on a quarterly basis. Now, five years later, housing data is still worth tracking, though it's not changing as quickly. For this reason, we have revamped the 2x4 into a semi-annual format.
Aside from a new look, the charts now track data over a longer time period, and several new data sources are included. We also heard from readers a desire for more Greater Minnesota data. We try to use statewide data wherever possible. But for some data, we must still rely on local data sources, typically available only in the Twin Cities (e.g. quarterly rental vacancy rates) or larger metro areas. The revamped 2x4 now includes data for several larger housing markets outside the Twin Cities, including St. Cloud, Rochester, and Duluth.