Market Watch Issue #1: Minneapolis

Written by Carolyn Szczepanski & Gabriela Norton

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 its 2016 “Sold Out” report, Minnesota Housing Partnership is launching a new research series tracking key trends in the unsubsidized multi-family rental markets across the Twin Cities.

This first report, published in March 2018, analyzes data for approximately 50,000 unsubsidized rental units in properties with four or more units in Minneapolis from the CoStar database.

Read the full report here.

Data analysis and mapping for this report was conducted by Gabriela Norton, Research Associate at Minnesota Housing Partnership. Questions about data? Contact Media inquiries? Contact jenny.jones(at)

Highlights from issue #1: Minneapolis 

Thousands of families paying too much for rent in Minneapolis

In Minneapolis, the renter population has grown 13% since 2000 to 89,420 households in 2016. Households of color are far more likely to be renters than white households. While 45% of white households are renters, 80% of Black, 80% of Native American, 75% of Latino and 66% of Asian households in Minneapolis are renters. Of the 89,420 renter households in Minneapolis, nearly 50,000 earned less than 60% of the area media income — or $51,500 for a family of four — in 2016. Of those families, 78% paid more than 30% of their income on housing and 46% paid more than half of their income on housing.

Average rent climbs to $1,279 in Minneapolis

Average rent in Minneapolis rose to $1,279 in 2017, a 17% increase over 2010 (adjusted for inflation). This is slightly higher than the Twin Cities overall, which rose to $1,172 in 2017, a 14% increase over 2010 (adjusted for inflation). For low- and moderate-income renters, this rise is significant. Thousands of households earning 40% to 60% of the area media income (AMI) — for instance, a family of four earning $34,340 to $51,480 annually — are able to call Minneapolis 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). Citywide, average rent is moving out of reach for these families.

Significant need for preservation

Unsubsidized affordable rental housing or NOAH is typically Class C: older properties that provide basic shelter without additional amenities. The overwhelming majority of Minneapolis’ rental properties are in this category, with 88% of properties in our dataset classified as Class C. Class C buildings often have lower rents that have seen minimal increases but also have higher capital investment needs. They also may be susceptible to new property owners making upgrades to reposition the units for higher income residents. For instance, in Minneapolis, there are compelling gaps between average rent in Class C and B buildings. Overall, average rent in Class C buildings is $937 — 49% below the average rent for Class B buildings and 37% below the overall city average. 

Low vacancy rates show demand for affordable units

When vacancy rates fall below 5%, renter households struggle to find affordable housing choices as property owners are able to be more selective in tenant screening and potentially more inclined to increase rent. While the overall vacancy rate in Minneapolis and the Twin Cities ticked up slightly to 4.5% in 2017, the overall vacancy rate has plummeted by 37% over the past decade. In all but three neighborhoods in Minneapolis, vacancy rates have declined since 2010, and in 60% of Minneapolis neighborhoods the vacancy rate was at or above 5% in 2010 but has now fallen below that mark.

Areas of Minneapolis retain affordable units for low- and modest-income families 

As rents have increased and vacancy rates have fallen, families with low to moderate incomes are faced with increasingly precarious affordability. Families earning 40% to 60% of the area media income (AMI) are able to call Minneapolis home by renting in unsubsidized, market rate apartments that have aged into affordability. Overall, in our dataset, there were 13,141 units affordable to households earning 40% to 60% of AMI and 1,817 affordable to households earning less than 40% AMI. (NOTE: Our dataset includes only properties with four or more units. Given the prevalence of smaller properties and rental of single family homes in North Minneapolis our analysis likely dramatically underrepresents the availability of affordable units in these neighborhoods.)

Neighborhoods with most units & property sales see highest rent increases 

More than half of the units in this analysis are contained in just six neighborhoods, each of which have more than 3,000 rental units, including Downtown, Loring Park, Uptown, Whittier, North Loop and Marcy Holmes, and have seen some of the most significant gains in rent. Meanwhile, a significant number of neighborhoods with units still affordable to moderate income families — like Whittier and Stevens Square — have seen only minimal increases in rent, keeping these pockets well below the citywide average rent of $1,279.

Property sales continue to rise, spike in 2017

From 2010 to 2017, 512 apartment properties were sold in Minneapolis, affecting 12,350 units. After a dip in sales in 2016, the pace continued to climb, doubling to 124 properties sold in 2017 which affected more than 4,000 units  — or 8% of all apartments in our dataset. Minneapolis represented 38% of all buildings sold in the Twin Cities region during that time and 24% of the units affected by property sales. 

Property sales may reposition rents

More than 2/3 of property sales from 2010 to 2017 were in just 11 neighborhoods. At the building level, nearly 20% of all properties sold from 2010 to 2017 were in just two neighborhoods: Uptown and Whittier. In our dataset, rents across the city have increased faster at properties that have been sold. In certain neighborhoods that distinction has been particularly apparent. For instance, in Uptown average rent since 2010 has increased by 22% in buildings that have been sold compared to 16% percent in buildings that have not been sold.

Property sales occurring across the city 

While Uptown has become an often-cited illustration of the loss of affordability in Minneapolis, similar factors are at play in other neighborhoods. While rent has begun to climb in Whittier — 9% from 2010 to 2017 — the Uptown-adjacent area still has the largest supply of units affordable to families earning 40% to 60% AMI and vacancy rates have dropped from 6.3% to 2.8% over the past seven years, indicating strong demand for these units. Meanwhile, Whittier has seen the highest number of property sales in our dataset, pointing to a need to provide tools for property owners to keep units affordable after purchase. While the largest number of units affected by property sales have been in less diverse neighborhoods, like Loring Park, North Loop and Marcy Holmes, buildings are also being purchased in majority communities of color, with property sales affecting 427 units in Phillips (80% households of color), 262 in Ventura Village (78% HOC), and 130 in Willard-Hay (78% HOC) since 2010. 


While rents are rising across the city, Minneapolis still has a notable number of affordable rental homes for moderate and lower-income families. These older properties with basic amenities still rent for far less than newer construction and have much lower vacancy rates. But, while there are a wealth of support systems in other areas of the housing continuum — for instance, preventing homelessness and assisting first-time homebuyers — there are very few tools to ensure housing stability for low to moderate-income renters. Working with policy makers, nonprofit and for-profit property owners to preserve naturally occurring affordable rental housing must be a priority.

Download the full report here.