Market Watch Issue #2: Saint Paul

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 second report, published in July 2018, analyzes data for 28,740 unsubsidized rental units in properties with four or more units in Saint Paul from the CoStar database. 

Download the full report.


Highlights from Issue #2: Saint Paul

Thousands of families paying too much for rent in St. Paul

Like many other cities, Saint Paul has experienced growth in renters in recent years, rising 12% from 2000 to 2016 to a total of 56,830 renter households in 2016. Like Minneapolis, more than half of Saint Paul households are renters rather than owners — and this is even more pronounced among households of color. From 2000 to 2016, median rent rose 15%, while median renter income dramatically dropped from 2000 to 2010 and, by 2016, had barely rebounded to 2000 levels. Of the 33,800 renter households earning less than 60% of AMI in 2016, 75% paid more than 30% of their income on housing and 39% paid over half of their income on housing.

That burden falls disproportionately on communities of color. In Saint Paul, while 35% of white renter households earn less than 30% of area median income (AMI), 53% of Black households earn less than 30% of AMI. In 2016, the average white household in Saint Paul could afford to spend $1,519 monthly on rent, while the average Black household could only afford to spend $659 monthly on rent.

Average rent rises above $1,000 — and out of reach for many city residents

From 2010 to April 2018, average rent rose 16% in Saint Paul to $1,075. While this is still lower than the average for the 7-county metro ($1,197 as of April 2018), for low- and moderate-income renters, this increase is significant. By traditional measures, rent is considered affordable when a household spends no more than 30% of its income on housing. At first glance, Saint Paul rental homes appear to be attainable to many families in need of affordable housing — based on area median income (AMI)However, when measured against the city median income (CMI) rather than the regional median income, that affordability evaporates. Again, as shown in the chart below, the average one-bedroom rents for $262 more per month than a household earning 60% of CMI can afford. The average two-bedroom is also far out of reach, with the average rent $385 more per month than a household earning 60% of CMI can afford.

Significant rent increases in select neighborhoods

Within the city’s planning districts, the highest average rents are in West Seventh ($1,509), Downtown ($1,492), Como ($1,150), Union Park ($1,148), St. Anthony ($1,125) and Highland ($1,047). Those areas have also seen the greatest increases in average rent from 2010 to 2017: 28% in Union Park, 24% in Downtown, 17% in West Seventh and Como, and more than 10% growth in St. Anthony, the East Side, North End and Eastview-Conway-Battle Creek-Highwood Hills.

Vacancy rates plunge across the city

In Saint Paul the vacancy rate has remained below 5% since 2012, with a tight market extending across the city. From 2010 to 2017, the vacancy rate in Saint Paul dropped nearly 50% to 3.3%. While largely matching the 7-county vacancy rate, Saint Paul’s vacancy rate is lower than that of Minneapolis (3.5%). Currently, 90% of the 41 Saint Paul neighborhood submarkets delineated in CoStar have a vacancy rate below 5%. And more than half saw vacancy rates plummet by more than 50% from 2010 to 2017.

Significant need for preservation in Saint Paul 

Unsubsidized affordable rental housing is typically Class C: older properties that provide basic shelter without additional amenities. The vast majority of buildings in Saint Paul — 90% — are Class C, and these buildings contain 77% of units in the city. In 2017 there were 1,033 Class C buildings in Saint Paul, or 24,510 Class C units. Vacancy rates in these buildings are extremely low (3%). Like the metro area, there is a dramatic difference in building size across classes. In Saint Paul, Class A buildings are typically larger with 162 units on average, while Class C buildings are much smaller with just 21 units on average. This tracks closely to the trend across the 7-county region, where Class A buildings average 145 units and Class C buildings average 29 units.

Fewer than 11,000 units of Naturally Occurring Affordable Housing (NOAH) in Saint Paul

Thousands of households earning 40% to 60% of the area media income — for instance, a family of four earning $34,340 to $51,480 annually — are able to call Saint Paul home by renting in unsubsidized apartments in the private market. Unsubsidized units that are affordable to these residents are often referred to as naturally occurring affordable housing (NOAH). In total, 27% of the buildings in our dataset contain apartments that are affordable to those earning 40 to 60% of AMI, which is notably higher than the 7-county average overall (19%). Of all the units in our dataset, 38% are affordable to that income bracket, totaling 10,918 units overall.

However, the AMI standard assumes a median income family can afford to spend $2,145 on housing without being cost-burdened, when, in fact, the median income family in Saint Paul can afford just $1,602 on housing per month. This means that rents that are affordable to 40-60% of AMI are still out of reach for many Saint Paul residents. When we apply the 40% to 60% standard to the city median income (CMI), thousands of units fall out of affordability. In our dataset, there are only 3,120 units in Saint Paul that are affordable to 40% to 60% of CMI, compared to 10,918 when applying the AMI standard.


Property sales predominantly smaller, Class C buildings 

From 2010 to 2017, nearly 300 buildings with more than 6,000 apartments collectively were sold in Saint Paul. Over this timeframe, property sales peaked in 2016, with 64 buildings and 1,725 units sold that year. That represented 6% of all rental properties and 6% of all units existing in that year. From 2010 to 2017 the overwhelming majority of sales were Class C buildings. For instance, in 2017, 92% of all buildings sold were Class C. Compared to the 45-unit average for buildings sold throughout the 7-county region, properties sold in Saint Paul were much smaller. Only 8% of buildings sold had more than 50 units, while 84% had fewer than 25 units.

Rising rents and significant sales along the green line

While transit brings opportunity, such public investments can also lead to displacement. In the 114 market rate multifamily buildings in Saint Paul within a half mile radius of the Green Line average rent increased 19% from 2010 to 2017 — markedly above the citywide rise of 16%. Since 2010, nine properties have been built in Saint Paul within a half-mile radius of the Green Line; seven of those properties are Class A, with a current average rent of $1,712 per month, far above the current citywide average of $1,075. In these buildings, rent has increased 24% since 2010. There have also been 37 property sales from 2010 to the first quarter of 2018 along this corridor.

New production not keeping up with demand — or closing the gap

Not included in this report are affordable rental housing developments created with public and/or private capital funding that include affordability obligations. According to data from the Metropolitan Council, 1,407 new units of affordable rental housing were created in Saint Paul from 2010 to 2016. The majority (54%) are affordable to households earning 60% of area median income or more, while 59% of Saint Paul renter households earn less than 60% of AMI. Only 19% are affordable to 30% of area median income. Over that same timeframe, 3,732 unsubsidized rental units were created with an average rent of $1,658 in 2016.


Like Minneapolis and the Twin Cities region overall, Saint Paul has seen rising average rent, declining vacancy rates and significant sales of multifamily rental properties over the past decade, challenging the thousands of renter households already struggling to afford safe, stable housing in their communities. Our analysis shows that, while more than 59% of Saint Paul renter households — 33,800 families — earn less than 60% of the area median income (AMI), our dataset contains fewer than 12,600 units that are affordable to those families.

Compounding this challenge, our analysis also highlights the distinction between the area and city median incomes. While the area median income, which includes more affluent parts of the region, is widely used as an affordability metric, renter households in Saint Paul earn less. This means that, when rising rents price families out or these properties with naturally occurring affordable units are upscaled, displaced families will be far less likely to find affordable units elsewhere. In fact, even subsidized affordable housing units at 60% of AMI will be out of reach for their income. Our analysis therefore highlights the importance of utilizing localized rental market data as opposed to using standard area-level data.

Our analysis also underscores an important potential distinction between the central cities and the suburbs in the size of NOAH properties. In our dataset, more than half of the buildings in Saint Paul that contain NOAH units have fewer than 25 units overall — and fewer than 1/3 have more than 50 units. In addition, the vast majority of properties sold have fewer than 25 units, as well. As advocates and policymakers explore and implement efforts to preserve NOAH units, these distinctions in property sizes will require different interventions and solutions.

Finally, our analysis provides further evidence that additional state and local resources are needed to address the lack of housing affordable to local residents, especially for those at the lowest income levels. Potential solutions could include city investment in an Affordable Housing Trust Fund and a statewide dedicated revenue source for affordable housing that targets investment for households earning less than 30% of AMI.

Download the full report!


Questions? Feedback? Contact Gabriela Norton, Research Officer, at