Across the Twin Cities, the growing ranks of renter households are facing an increasingly challenging housing market with rising rents and declining vacancy rates. While developers are leveraging public and private resources to create new affordable units, current owners of unsubsidized rental properties have few tools to preserve and improve aging properties to maintain homes for current and future tenants.
Building on our 2016 "Sold Out" report, Minnesota Housing Partnership launched a new research series tracking key trends in the unsubsidized multifamily rental markets across the Twin Cities.
This third report, published in November 2018, analyzes data for 210,915 unsubsidized rental units in properties with four or more units in the 7-county metro from the CoStar database.
Highlights from Issue #3: Twin Cities
Rent is a racial equity issue: preserving NOAH impacts communities of color
Overall, 52% of renters across the region — 192,555 households — are cost burdened, meaning they spend more than 30% of their gross monthly income on housing. Research has shown that this results in families spending less on other necessities like food, transportation and medical care. This burden falls disproportionately on communities of color. As seen below, 43% of White renter households are cost burdened while 57% and 62% of Native and Black renters are forced to pay more than they can afford for housing. Families served by NOAH are particularly impacted by cost burden. Of the 193,789 renter households earning 60% of the area median income or less, 76% pay more than 30% of their gross monthly income on rent and 42% (nearly 82,000 families) pay more than half of their income on rent.
Small NOAH buildings are concentrated in Minneapolis and St. Paul with 91% of properties located in Hennepin and Ramsey counties. For Hennepin and Ramsey, small NOAH comprises a sizable portion of all NOAH buildings at 45% and 43% respectively.
Medium NOAH buildings are prevalent in the core cities and move into the first ring suburbs. Anoka and Scott counties see the largest percentage of their NOAH properties in medium buildings at 38% and 43% respectively.
Large NOAH buildings are more widely distributed with more concentration in the suburbs. While large NOAH comprise the smallest percentage of NOAH properties in Hennepin and Ramsey counties they make up 60% of NOAH buildings in Dakota County and nearly half (46%) in Scott County.
Small and Medium NOAH concentrated in lower income and communities of color
The majority of small and medium NOAH buildings are in cities with more than 30% people of color. Of the 79 cities in the seven-county metro area, 11 have more than 34% people of color, including Brooklyn Center, Brooklyn Park, Saint Paul, Minneapolis, Richfield, and Hopkins. Eighty-three percent of medium and 67% of small NOAH buildings are in these cities, compared to just 43% of large NOAH buildings.
Property transactions most prevalent in smaller properties
Of the total 1,576 sales transactions in Class C properties, 74% were small buildings, with just 10% occurring in large buildings with more than 50 units. Not surprisingly, however, of the total 44,305 units impacted by property sales in Class C buildings, 58% of units were sold in large buildings, followed by 25% (11,115) in small buildings.
While several high-profile property sales and transitions, like the Crossroads at Penn in Richfield, have focused the attention of policymakers and the public on the need to preserve naturally occurring affordable housing, it is important to recognize that the geography and make-up of NOAH properties is not uniform. To craft effective and viable preservation policies and financing tools, it's essential to identify and understand these distinctions. While there is a need to preserve larger properties, notably in the suburbs that contain hundreds of units, there is also a significant stock of smaller buildings, especially in the central cities of Minneapolis and St Paul and areas that lower median income renters and communities of color call home. It is essential that policymakers, advocates, and developers work to find solutions that fit the needs of their communities and the realities of their housing stock.
Data analysis, writing and mapping for this report was conducted by Gabriela Norton, Research Officer at Minnesota Housing Partnership, with editing and design by Carolyn Szczepanski, MHP Director of Research and Communications. Questions about data? Contact gabriela.norton(at)mhponline.org. Media inquiries? Contact anne.mavity(at)mhponline.org.