1

MARKET WATCH: MinneapolisTrends in the unsubsidized multifamily rental market

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. In this new research series, Minnesota Housing Partnership will track key trends in the unsubsidized multifamily rental markets across the Twin Cities, starting with Minneapolis. This report analyzes data for approximately 50,000 unsubsidized rental units in properties with four or more units in Minneapolis from the CoStar database. Data information and limitations on page 2.

1- Unless otherwise noted, information in this section comes from the U.S. Census Bureau, 2012-2016 American Community Survey | 2- American Community Survey, 1-year estimates 3- Metropolitan Council staff analysis of U.S. Census Bureau, 2012-2016 American Community Survey Public Use Microdata Sample five-year data | 4- IPUMS Census 2000 and 2015 5-year ACS microdata files analyzed by the National Equity Atlas, a partnership of PolicyLink and University of Southern California Program for Environmental and Regional Equity.

Issue #1MARCH 2018

THOUSANDS OF FAMILIES PAYING TOO MUCH FOR RENT IN MINNEAPOLIS1

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.

From 2000 to 2010, median income for renter households in Minneapolis plummeted by nearly 20%, while rents continued to rise. Though overall renter income has begun to rebound since 2010, incomes for households of color dropped more precipitously and have risen more slowly.2

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.3

That cost burden also falls disproportionately on households of color. According to an analysis from PolicyLink and University of Southern California, 66% of women of color in Minneapolis were cost burdened in 2015, compared to 37% of white men.4

Rental households in Minneapolis earning less than 60% of area median income that are cost burdened, 2016 3

Paying more than 30% on housing

Paying more than 50% on housing

78%46%

$25,000

$30,000

$35,000

$40,000

$600

$800

$1,000$45,000

$35,819

$799

$867 $864

$921 $932

$29,366 $29,115

$33,830

$36,718

$500

2000 2005 2010 2015 2016

Median rent vs renter median income 2

RACE % of households that are renters

Number of renter households

ASIAN 66% 5,067

BLACK 80% 22,070

LATINO 75% 7,609

NATIVE 80% 1,364

WHITE 45% 53,310

2

DATA NOTES AND LIMITATIONS:

DATA SOURCE: Unless otherwise noted, data in this report comes from CoStar, a commercial real estate database that tracks multifamily properties with four or more units. This includes 6,627 multifamily properties in the 7-county Twin Cities metro, for which data is directly sourced from property management by CoStar researchers. This report analyzes data for approximately 50,000 unsubsidized rental units in properties with 4 or more units in Minneapolis, excluding those that are currently under construction or renovation. Data for this report was accessed and downloaded the first week of January 2018.

RENT DATA: CoStar provides average, rather than median, rent data. Of the approximately 50,000 unsubsidized rental units within the boundaries of the City of Minneapolis tracked by CoStar and included in this analysis, 67% include rent data. This coverage is not uniform across neighborhoods and, at the neighborhood level, on page 8, we include only neighborhoods with robust rent data across a high percentage of units. All rents in this report are adjusted for inflation.

NEIGHBORHOOD BOUNDARIES: There are minor distinctions between the delineation of CoStar sub markets and City of Minneapolis neighborhoods. While the boundaries largely align, there are distinctions in naming — most notably, CoStar’s Uptown sub market comprises the East Isles and Lowry Hill East neighborhoods; CoStar’s East Calhoun sub market aligns with the ECCO and CARAG neighborhoods; and CoStar's Downtown sub market includes Downtown West, Downtown East and Elliot Park. There are also several Minneapolis neighborhoods, including Kenny and Kenwood, that do not have any rental data in the CoStar database.

CLASSES: CoStar defines building class in the following way. CLASS A buildings represent current trends and standards in design and/or are of a timeless, perhaps historic quality. They include high quality finishes such as hardwood floors, granite countertops, and/or stainless steel appliances, as well as on-site shared facilities like clubhouse/party room, fitness center, business center, etc. CLASS B buildings are aesthetically average and contextually appropriate. They include average quality finishes and a few on-site shared facilities and spaces. CLASS C buildings are purely functional, often with below average finishes, small windows and likely no on-site facilities or shared spaces.

MINNEAPOLIS RENTAL STOCK: According to 2018 Minneapolis data, more than 70% of the city’s licensed rental stock are in properties with four or more units. This includes all rental licenses, including units that are subsidized or were built with public funding assistance.

CITY OF MINNEAPOLISNEIGHBORHOODS

Stevens Square

Como

Howe

Fulton

Seward

Hiawatha

Linden Hills

Jordan

Ericsson

Bryn - Mawr

East Harriet

Hale

Columbia Park

Lynnhurst

Whittier

Victory

Standish

Cooper

Near - North

Windom

Hawthorne

Waite Park

Central

Keewaydin

Northrop

North Loop

Longfellow

Wenonah

Folwell

Uptown

Diamond Lake

Field

Holland

Harrison

McKinley

Page

Lyndale

Marcy Holmes

Northeast Park

Windom Park

Bryant Bancroft

Sheridan

Regina

Loring Park

Willard -Hay

KingField

Armatage

Lowry Hill

Tangletown

Lind - Bohanon

Minnehaha

Webber - Camden

CorcoranWest

Calhoun

Morris Park

Audubon Park

Marshall Terrace

PowderhornPark

Prospect Park

Cedar -Isles -Dean

East Calhoun

Cleveland

Cedar Riverside

Shingle Creek

Ventura Village

Phillips

St. Anthony

West

Bottineau

University

Logan Park

Beltrami

Downtown

St. Anthony

East

Sumner - Glenwood

Nicollet Island

COSTAR BOUNDARIES

Circle indicates CoStar & MPLS boundaries differ

Properties with 4+ units | 71% (66,036 units)

Properties with 1-3 units 29% (27,335 units)

3

$808$993

$1,420

$937

$1,178

$1,663

$2,191

$1,363

$1,677

$1,093 $1,279

$1,796

+17%

+23%

+19%

+17%

OVERALL STUDIO 1 BEDROOM 2 BEDROOM

$633

$949

$678

$1,017

$814

$1,220

Av rent for properties built 2010-2017

Av rent 2017

Av rent 2010

Increase in av rent 2010-2017

Affordable to 40% area median income

Affordable to 60% area median income

AVERAGE RENT CLIMBS TO $1,279 IN MINNEAPOLISAverage 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. As shown in the chart above, the average one-bedroom rents for $500 (74%) more per month than a household earning 40% AMI can afford and $161 (15%) more per month than a household earning 60% AMI can afford. The average two-bedroom is $850 (105%) more per month than 40% AMI can afford and $443 (34%) more per month than 60% AMI can afford.

Some of this increase in rent is likely driven by new construction, as average rent in properties that have come on the market since 2010 is 40% higher than the overall average. According to our dataset, the vast majority of new, unsubsidized construction was concentrated in neighborhoods surrounding or in close proximity to downtown, including Marcy Holmes (20), North Loop (13 properties), Uptown (11), Prospect Park (9), and Downtown (8).

MINNEAPOLIS AVERAGE RENT BY UNIT SIZE

Class A7,521 units$1,863 average rent

Class B2,448 units$1,634 average rent

Unsubsidized new production, 2010-2017

Rent adjusted for inflation

Affordability by raceHousing is affordable if a family or individual spends no more than 30% of its monthly income on housing — but income in Minneapolis varies widely by race. Here’s what the median income household by race, including both renters and owners, can afford to spend per month:

Black: $522 | Native American: $562 | Latino: $1,005 Asian: $1,194 | White: $1,607

4

SIGNIFICANT NEED FOR PRESERVATION

5- Full descriptions of CoStar class designations on page 2.

Unsubsidized affordable rental housing or NOAH is typically Class C: older properties that provide basic shelter without additional amenities.5 The overwhelming majority of Minneapolis’ rental properties are in this category, with 88% of properties in our dataset classified as Class C. However, these buildings, on average, are far smaller than Class A and Class B buildings. For instance, while there are vastly fewer Class A buildings than Class C buildings, Class A buildings average close to 150 units compared to less than 20 for 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.

0

$500

$1,000

$1,500

$2,000

$2,500

Overall

Class A Class B Class C

$1,769

$1,398

$937

Studio

$1,367

$1,050

$757

2 bedroom

$2,174

$1,707

$1,140+30%

+39%

1 bedroom

$1,638

$1,315

$893

+25%

+47%

+27%

+50%

Difference in rent b/w Class C and B

Difference in rent b/w Class B and A

+27%

+49%

AVERAGE RENT BY BUILDING CLASS

Class C88%

Class A: 4%

Class B8%

BUILDINGS by class Class A: 69

Class B: 159Class C: 1,773

Class C59%

Class B20%

Class A21%

UNITS by classClass A: 10,294 Class B: 10,040Class C: 29,411

AVERAGE BUILDING SIZE (units) by class

149 63 17 Class A Class B Class C

5

VACANCY BY BUILDING CLASSThe overall vacancy number obscures trends at various price points. For instance, vacancy rates in higher-end Class A buildings is 7%, compared to just 3.3% in Class C buildings, demonstrating greater demand for these more affordable units.

Class A

7% Class B4.8%

Class C3.3%

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.

LOW VACANCY RATES SHOW DEMAND FOR AFFORDABLE UNITS

4%

5%

6%

7%

8%

2%

3%2007 20172012

7.1%6.6% 6.9%

6.5%5.9%

5% 5%4.8% 4.8%

4.2% 4.5%

7%6.4%

6.7%6.3%

5.8%

4.8%4.5% 4.4% 4.6%

3.8%3.5%

Minneapolis overall Units under $1,000VACANCY RATES 6

6- For our vacancy data points, we remove any building in its first year of leasing. CoStar vacancy rate data is higher than reported by other data sources, like Marquette Advisors. This may be due to the fact that the sample size is much larger, includes properties with 4 or more units, as opposed to 10 or more, and is directly sourced rather than relying on survey data.

6

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. These are overwhelmingly smaller units, with 2,912 studios, 7,846 one-bedroom units, 2,126 two-bedroom units, 239 three-bedroom units and just 18 four-bedroom units.

AREAS OF MINNEAPOLIS RETAIN AFFORDABLE UNITS FOR LOW- AND MODEST-INCOME FAMILIES

Neighborhood 40-60 AMI units Neighborhood 40-60

AMI units

Whittier 1,888 Hiawatha 138

Marcy-Holmes 1,187 Howe 130

Loring Park 1,184 Ventura Village 125

Uptown 1,064 Cedar Isles Dean 112

East Calhoun 1,041 Cedar Riverside 107

Stevens Square 881 Wenonah 99

Lowry Hill 569 Folwell 98

Seward 503 Northeast Park 92

Windom 468 Corcoran 82

Downtown 375 Armatage 72

Lyndale 360 Minnehaha 70

Prospect Park 311 Marshall Terrace 66

Windom Park 205 West Calhoun 66

Phillips 188 Cooper 65

Tangletown 175 Central 61

Powderhorn Park 171 Como 58

Longfellow 156 Bancroft 51

Linden Hills 148 Holland 48

East Harriet 145 Webber-Camden 37

Kingfield 138 Cleveland 36

40% AMI 60% AMI

Studio $633 $949

1 bedroom $678 $1,017

2 bedroom $814 $1,220

3 bedroom $940 $1,410

4 bedroom $1,049 $1,573

Rent affordable to

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.

Stevens Square

Como

Howe

Fulton

Seward

Hiawatha

Linden Hills

Jordan

Ericsson

Bryn - Mawr

East Harriet

Hale

Columbia Park

Lynnhurst

Whittier

Victory

Standish

Cooper

Near - North

Windom

Hawthorne

Waite Park

Central

Keewaydin

Northrop

North Loop

Longfellow

Wenonah

Folwell

Uptown

Diamond Lake

Field

Holland

Harrison

McKinley

Page

Lyndale

Marcy Holmes

Northeast Park

Windom Park

Bryant Bancroft

Sheridan

Regina

Loring Park

Willard -Hay

KingField

Armatage

Lowry Hill

Tangletown

Lind - Bohanon

Minnehaha

Webber - Camden

CorcoranWest

Calhoun

Morris Park

Audubon Park

Marshall Terrace

PowderhornPark

Prospect Park

Cedar -Isles -Dean

East Calhoun

Cleveland

Cedar Riverside

Shingle Creek

Ventura Village

Phillips

St. Anthony

West

Bottineau

University

Logan Park

Beltrami

Downtown

St. Anthony

East

Sumner - Glenwood

Nicollet Island

Number of Units1 - 37

38 - 112

113 - 205

206 - 569

570 - 1888

Number of units affordable to 40-60% AMI by neighborhood

Stevens Square

Como

Howe

Fulton

Seward

Hiawatha

Linden Hills

Jordan

Ericsson

Bryn - Mawr

East Harriet

Hale

Columbia Park

Lynnhurst

Whittier

Victory

Standish

Cooper

Near - North

Windom

Hawthorne

Waite Park

Central

Keewaydin

Northrop

North Loop

Longfellow

Wenonah

Folwell

Uptown

Diamond Lake

Field

Holland

Harrison

McKinley

Page

Lyndale

Marcy Holmes

Northeast Park

Windom Park

Bryant Bancroft

Sheridan

Regina

Loring Park

Willard -Hay

KingField

Armatage

Lowry Hill

Tangletown

Lind - Bohanon

Minnehaha

Webber - Camden

CorcoranWest

Calhoun

Morris Park

Audubon Park

Marshall Terrace

PowderhornPark

Prospect Park

Cedar -Isles -Dean

East Calhoun

Cleveland

Cedar Riverside

Shingle Creek

Ventura Village

Phillips

St. Anthony

West

Bottineau

University

Logan Park

Beltrami

Downtown

St. Anthony

East

Sumner - Glenwood

Nicollet Island

Number of Units1 - 37

38 - 112

113 - 205

206 - 569

570 - 1888

0

1 - 37

38 - 112

113 - 205

206 - 569

570 - 1888

7

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. Because of the distinction in building sizes by class, seen on page 4, while the vast majority of buildings sold in 2017 were Class C, those sales represented less than half of the units affected. That trend has held steady over the past five years, with Class C representing 80-90% of buildings sold but 40-50% of units affected.

PROPERTY SALES CONTINUE TO RISE, SPIKE IN 2017

Twin CitiesMinneapolis

PROPERTIES SOLD

50

100

150

200

250

300

288

3%

64

105

143155 154

184

244

287

25 39

63 6051

78 72

124

2010 2011 2012 2013 2014 2015 2016 2017

2000

4000

6000

8000

10000

12000

2010 2011 2012 2013 2014 2015 2016 2017

1059 980 9581512

2249

1308

4005

1355

3942 3940

5669

8593

6489

10627

11525UNITS SOLD

Twin CitiesMinneapolis

Twin CitiesMinneapolis

PROPERTIES SOLD

50

100

150

200

250

300

288

3%

64

105

143155 154

184

244

287

25 39

63 6051

78 72

124

2010 2011 2012 2013 2014 2015 2016 2017

2000

4000

6000

8000

10000

12000

2010 2011 2012 2013 2014 2015 2016 2017

1059 980 9581512

2249

1308

4005

1355

3942 3940

5669

8593

6489

10627

11525UNITS SOLD

Twin CitiesMinneapolis

2017 SALES BY CLASS A

BC

BUILDINGS

12

104

1,231

908

1,866

8

UNITS

8

As highlighted on page 9, 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 2007 has increased by 22% in buildings that have been sold compared to 16% percent in buildings that have not been sold.

$900

$1,200

$1,500

2010 2011 2012 2013 2014 2015 2016 2017

$1,350

$1,150

$915

$983

$1,031$1,060

$1,218

$1,125

$1,411

$1,386

+22%Sold +16% UnsoldUPTOWN

+16%Sold +2%UnsoldMINNEAPOLIS

RENT FOR SOLD vs UNSOLD PROPERTIESPROPERTY SALES REPOSITION RENTS

Rent increases adjusted for inflation

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, which 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.

$1,562 $1,858 $1,350 $1,692 $1,193 $1,453 $1,138 $1,354 $1,160 $1,263 $912 $997 $945 $965 $833 $912 $859 $877 $816 $856

$1,500 $2,000$750 $1,000

North LoopDowntown

UptownWest Calhoun

Loring ParkEast Calhoun

Lowry HillWhittier

Stevens SquareLyndale

19%25%22%19%9%9%2%9%2%5%

$1,250 $1,750

$1,279 city averageNeighborhoodRent increase 2010-2017

Average rent

5000+ units

3K-5K units

1K-3K units

Number of units Rent

2010 Rent 2017

$816 $856

Rent adjusted for inflation

9

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 neighborhoods9, 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 color10 ), 262 in Ventura Village (78% HOC), and 130 in Willard-Hay (78% HOC) since 2010.

PROPERTY SALES OCCURRING ACROSS THE CITY

$1,562 $1,858 $1,350 $1,692 $1,193 $1,453 $1,138 $1,354 $1,160 $1,263 $912 $997 $945 $965 $833 $912 $859 $877 $816 $856 Rent adjusted for inflation

Percent Household of Color

0% - 20%

21% - 35%

36% - 57%

58% - 88%

Sold Property

Lyndale

Lind - Bohanon

ShingleCreek

Victory

Webber - Camden

Columbia Park Waite Park

AudubonPark

Northeast Park

McKinleyMarshallTerrace

Folwell

Cleveland

Hawthorne

Holland

Jordan

LoganPark

Windom Park

Beltrami

Bottineau

Como

Sheridan

St. AnthonyWest

Sumner -Glenwood

Near - NorthWillard -

Hay

ProspectPark

Nicollet Island

Harrison

Bryn - Mawr

Lowry Hill

North Loop

Downtown

EastCalhoun

MorrisPark

Cedar Riverside

Cooper

Seward

Howe

Corcoran

HiawathaEricsson

Standish

Wenonah

PowderhownPark

Keewaydin

Northrop

MinnehahaHale

Diamond Lake

University

LongfellowCentral

Regina

Bryant

Whittier

Bancroft

Field

PageTangletown

Armatage

EastHarriet

WestCalhoun

Linden Hills

Cedar -Isles -Dean

KingField

LynnhurstFulton

Windom

Kenwood

Uptown Phillips

LoringPark

MarcyHolmes

VenturaVillage

Stevens Square

St. AthonyEast

Percent Household of Color

0% - 20%

21% - 35%

36% - 57%

58% - 88%

Sold Property

Lyndale

Lind - Bohanon

ShingleCreek

Victory

Webber - Camden

Columbia Park Waite Park

AudubonPark

Northeast Park

McKinleyMarshallTerrace

Folwell

Cleveland

Hawthorne

Holland

Jordan

LoganPark

Windom Park

Beltrami

Bottineau

Como

Sheridan

St. AnthonyWest

Sumner -Glenwood

Near - NorthWillard -

Hay

ProspectPark

Nicollet Island

Harrison

Bryn - Mawr

Lowry Hill

North Loop

Downtown

EastCalhoun

MorrisPark

Cedar Riverside

Cooper

Seward

Howe

Corcoran

HiawathaEricsson

Standish

Wenonah

PowderhownPark

Keewaydin

Northrop

MinnehahaHale

Diamond Lake

University

LongfellowCentral

Regina

Bryant

Whittier

Bancroft

Field

PageTangletown

Armatage

EastHarriet

WestCalhoun

Linden Hills

Cedar -Isles -Dean

KingField

LynnhurstFulton

Windom

Kenwood

Uptown Phillips

LoringPark

MarcyHolmes

VenturaVillage

Stevens Square

St. AthonyEast

0 - 20%21 - 35%36 - 57%58 - 88% Sold Property

HOC = Households of color

Neighborhood % HOC Units Bldgs

Downtown 43% 2,201 12

Loring Park 31% 1,561 9

North Loop 25% 1,149 12

Prospect Park 27% 1,140 11

Uptown 20% 994 45

Marcy-Holmes 25% 888 28

Whittier 44% 857 56

Stevens Square 38% 463 18

Phillips 80% 427 20

Lyndale 52% 315 26

East Calhoun 12% 307 23

Ventura Village 78% 262 16

Powderhorn Park 53% 242 21

Lowry Hill 12% 168 14

Wenonah 33% 135 18

Willard Hay 78% 130 11

Longfellow 38% 112 14

Central 74% 105 15

Folwell 69% 85 7

Harrison 65% 58 6

Webber Camden 61% 42 10

Hawthorne 85% 40 7

PROPERTY SALES, 2010-2017

9- Demographic data by Minneapolis neighborhood comes from Minnesota Compass | 10- The boundaries for Phillips in CoStar include the Minneapolis neighborhoods of Phillips West, Midtown Phillips and East Phillips.

Property sales 2010 to 2017 and % households of color by neighborhood

Data analysis and mapping for this report was conducted by Gabriela Norton, Research Associate at Minnesota Housing Partnership, with writing and design by Carolyn Szczepanski, MHP Director of Research and Communications. Research assistance and input provided by Matt Schroeder (Metropolitan Council), Rachel Robinson and John Errigo (Greater Minnesota Housing Fund), Tony Damiano (Univ of MN Center for Urban and Regional Affairs), Sarah Berke (Family Housing Fund), Dan Hylton (HousingLink), Tom O’Neil (Dougherty Mortgage), and Michael Peterson (City of Minneapolis). Learn more: mhponline.org

MARKET RATE RENTAL PROPERTIES WITH THREE OR FEWER UNITSNot included in the analysis of this report are townhomes, condos, duplexes, or single family rental homes. HousingLink’s Twin Cities Rental Revue for the fourth quarter of 2017 tracked 1,703 such units in Minneapolis, for which the average rent was $1,563. Geographically, while underrepresented in our data set, the North Minneapolis neighborhoods of Jordan, Webber-Camden, Folwell and Hawthorne are among the top 10 neighborhoods for the units tracked by HousingLink. The rental properties in these neighborhoods are primarily single family homes or duplexes and the average rent is $1,359 per month. In contrast, the Downtown area, which includes three sub-markets in the top 10, consisted overwhelmingly of condos (71%) with an average rent of $2,511. Overall, comparing the final quarter of 2017 to the final quarter of 2016, rent trends were mixed. For two-bedroom units, median rent increased 4%, while one-bedroom units saw median rent decline by 11%.

Data in the HousingLink Twin Cities Rental Revue is based on actual market rate listings from private market sources.

Building Type Average Rent Average Bedroom

Condo $1,795 1.45

Duplex $1,439 2.65

Single family home $1,902 3.68

Townhome $2,056 2.70

AVERAGE $1,563 1.89

SUBSIDIZED AFFORDABLE HOUSING DEVELOPMENT 2010-2016Not included in this report are affordable rental housing developments created with public and/or private capital funding that include affordability obligations. According to Housing Counts: Measuring Affordable Housing Production and Preservation in the Twin Cities, 2,154 new units of affordable rental housing were created in Minneapolis from 2010 to 2016. The vast majority are affordable to households earning 50% or 60% of area median income; less than 10% are affordable to 30% of area median income. Over that same timeframe, 8,877 unsubsidized rental units were created with an average rent of $1,745 in 2016.

Only developments with public and/or private capital funding that includes affordability obligations are listed; rental assistance to renters is not tracked.

New private market rental production: 8,877 units

New affordable rental housing production: 2,154

210 units at 30% AMI

990 unitsat 50% AMI

954 unitsat 60% AMI

CONCLUSIONWhile 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.

8,877 units

Av rent$1,745in 2016