Apartment rentals in the Twin Cities are soaring as rising mortgage rates and higher home prices are making home ownership out of reach for more and more households.
In the first nine months of the year, renters occupied more than 6,600 additional rentals across metropolitan areas, according to Marquette Advisors’ third-quarter report. This is a 12% increase for him compared to 2021, and from 2017 he is almost double the 2019 pre-pandemic average.
Citing CoStar’s national index, Marquette said the national year-to-date absorption rate in the third quarter was 40% lower than the average for the three years before the pandemic.
“There is a huge demand in almost every market because there is not enough housing. SoRoc’s main apartment in Rochester.
The company acquired Community in February. The entire project will have 380 rentals in several buildings when the new apartments are expected to be completed in early 2024.
Dettore said market fundamentals in the Twin Cities are particularly strong and the company is looking for other development opportunities in the metropolitan area and Rochester.
“We are seeing continued and sustained demand with only a slowdown in supply,” he said. “Rent growth is slowing in other markets.”
Twin Cities apartment construction is slowing. So far, he has 6,461 rentals built this year, compared with 7,900 last year, the most in at least a decade.
A steady increase in apartment construction over the past few years has helped ease a severe shortage of rental properties. is assumed to be The vacancy rate will remain below 3.5% until 2020.
However, vacancy in the Twin Cities metro area in the third quarter of this year was 4%, up from 3.9% a year earlier. Rents were flat quarter-over-quarter but up nearly 6% from last year.
Demand has changed dramatically by submarket. Overall, suburban market vacancy rates were 3.5% in the third quarter, compared with 5.3% in Minneapolis and 5.0% in St. Paul.
The highest vacancy rate was in the Lakeville/Farmington area at 16%. Downtown St. Paul, downtown Minneapolis and Litchfield had mid-7% vacancy rates. Vacancy rates were lowest in Blaine and Falcon Heights/Lauderdale, at less than 2% in both areas.
Both downtowns have lower average vacancy rates than earlier in the pandemic, but still favor renters. Both have more supply than demand, with some buildings offering small rent reductions and his one-time rent discount.
Twin Cities rents averaged $1,398 in Q3, in line with Q2 but up 5.9% from last year.
Rents rose $3 nationwide in October to $1,727, according to national real estate research firm Yardi. Year-over-year, rents rose just 8.2%, their lowest level since last summer, and down from his first-quarter peak of 15.3%.
Marquette Advisors figures do not include income-restricted senior housing, which is even scarcer in metropolitan areas.
Rental demand is typically driven by increased employment, migration and household formation, all of which are weaker than normal. Marquette attributes the rise in rents to higher mortgage rates, making it harder for more and more people to buy a home.
“These sales market challenges are likely to persist for a considerable period of time and could underpin demand for rentals,” said Brent Wittenberg, Vice President of Markets.