Apartment Property Sales and Rising Rents in Twin Cities Region
“A single instance of an apartment sale and upscaling can significantly reduce the stock of unsubsidized affordable housing in a given community,” according to a study by Atticus Jaramillo and Chip Halbach of the Minnesota Housing Partnership. The authors use multiple data sources to analyze more than 1,000 apartment property sales in the seven-county, Twin Cities metropolitan region between 2010 and 2015. Using demographic and spatial analysis, the researchers examine the pace, price, location, and impact of apartment property sales in this area. While apartment sales can extend the life of old properties and improve their management and their community image, low-income renters may also experience the negative effects of these sales, including factors that lead to displacement (e.g., rising rents, tightened credit standards for residents, and declining to accept rental assistance payments). At the neighborhood level, these pressures can reduce rental options for low-wage workers, retirees, and low-income families. The authors’ findings attempt to spur community discussion and action to ensure continued availability of affordable housing in the Twin Cities area.
- From 2010 to 2015, 13 percent of the multifamily rental housing stock in the Twin Cities metropolitan region was sold. In 11 suburban communities, at least a quarter of the community’s rental housing supply was sold.
- During the same six years, the average sales price of apartments rose to $87,700 per unit, a 56 percent increase.
- The renter population, which earns between $50,000 and $99,000 annually, grew 19 percent between 2010 and 2015—adding 14,600 new renter households. The segment of households with an income over $100,000 increased 70 percent.
- More than 30 percent of the rental units sold in this period were located in census tracts with a population at least 26 percent non-white with an area median income between $40,000 and $60,000. This could lead to displacement of low-income and minority households.
- On average, 60 properties a year were sold in Minneapolis, 30 in St. Paul, and 2 in the region’s suburbs.
- Apartments sold over this period had an average of 32 units each. The smaller number of suburban property sales were typically larger buildings, averaging 83 units each.