Does Minneapolis need more rental housing?by Brandt Williams, Minnesota Public Radio
Minneapolis city officials want to make sure the city's growing and increasingly diverse population can find a place to live. For instance, the city has recently created new incentives to boost home ownership in north Minneapolis, where rental units have overtaken owner-occupied homes in the last several years.
The city is also trying to increase the amount of affordable rental housing. According to a recent report from a housing advocacy group, there's growing need for it.
Minneapolis, Minn. — The Minneapolis Community Planning and Economic Development department reports that only 15 percent of the housing in Minneapolis is available for rent.
Rental makes up a small piece of the housing pie, so its distribution is particularly noteworthy.
North Minneapolis has more than it's fair share of rental. But it's hardest to find in southwest Minneapolis, near Lakes Harriet and Calhoun and sections along Minnehaha Creek. Especially what's known as workforce, or affordable housing.
"What we'd like to see in those communities is an opportunity, along our corridors, for workforce housing, rental options that are affordable to lower and middle income individuals," said City housing director Tom Streitz. "So that kind of diversity is what we're seeking in southwest (Minneapolis) and we've had some success in doing that."
That success, according to Streitz, is an 82-unit mixed income development near Minnehaha Creek called Creek Terrace. It contains 16 units of subsidized or Section 8 housing.
There is more affordable rental housing in the works.
Recently the city awarded more than $1 million in federal housing funds to a non-profit developer who will build about 40 units of rental housing for low income people.
There's a growing need for this kind of rental housing, according to a trend report released last week by the Minnesota Housing Partnership.
Researcher Leigh Rosenberg says housing is considered affordable if it costs 30 percent or less of household income. And household incomes are shrinking as more people lose their jobs or take lower paying jobs.
Rosenberg says the fair market rent for a two-bedroom apartment in an area that includes Minneapolis, St. Paul and Bloomington is $823 per month.
"That requires an income of almost $35,000 per year," she said. "Unfortunately, that's definitely out of reach for a number of families that would be renting in the area."
Rents have increased consistently for the last several years, mostly as a result of supply and demand and the foreclosure crisis.
Foreclosures have created a simultaneous decrease in supply and increase in demand for rental housing.
The demand has increased as newly foreclosed homeowners are forced to find a place to live.
"But the other thing is that a number of previously rental units, foreclosed," Rosenberg said. "In fact our best estimate is that about 40 percent of the foreclosures in Minneapolis and St. Paul, were foreclosures of rental units."
The rental landscape is a little different for renters living above the poverty line. And some say the poor economy may benefit some who are looking for a good deal on rent.
According to Donna Mithun, with Apartment Search, there's a wide variety of rental property available throughout the city.
Mithun says usually, now is the time that people come to her office or use Apartment Search's online service to find a place to live. But they're not.
"What I think we haven't seen is the normal people that start looking at this time of the year," she said, "because there's so much uncertainty, that they're just staying put. Or they're moving back home or they're moving in with friends."
Lower demand means lower rents -- good news for people who want to move to areas where rents are typically higher.
One example is the Uptown area, which is close to lakes, restaurants and other amenities.
Apartment Search supervisor Amy Halvorson says in Uptown it's hard to find a two-bedroom apartment for under $1,000 dollars a month. That's nearly $200 dollars a month more than the fair market rent.
According to Halvorson, property owners and managers are becoming more flexible.
"The thing that we've also seen that's going with the economy, is the qualifications that properties normally have for accepting people to come in to live at their community, they've loosened up a little bit."
Halvorson says that means managers may be more willing to overlook blemishes on the renter's credit history.
Property owners are more open to taking less rent than they'd advertised, Halvorson says, so renters shouldn't be afraid to haggle a little bit.
- Morning Edition, 04/21/2009, 7:25 a.m.