Renters who live in the least-expensive apartments in the Twin Cities metro are paying their rent at a lower rate than those who live in higher-priced units, but on-time rent payments saw a slight uptick in all market-rate categories last month, according to a monthly survey by the Minnesota Multi Housing Association (MHA), a trade group that represents rental-property owners and managers across the state.
The MHA's Jan. 6 survey of more than 30,000 mostly market-rate units managed by its members shows that 86% of renters in older, more-affordable buildings in less-desirable areas (Class C buildings) were able to pay their January rent, a slight increase from the previous month, but 6 percentage points lower than last year at the same time.
Collections in the newer and more expensive Class A and B properties stood at 96% and 92%, respectively, a slight increase from the previous month but down a few percentage points from a year ago.
In a statement, MHA President and CEO Cecil Smith credits $100 million in state housing assistance and a new wave of federal funding with helping Twin Cities landlords and renters avoid a major crisis.
"There have never been data-driven indicators of an eviction wave in Minnesota, and the new support should eliminate any irresponsible discussion of such a wave by activists," he said.
In April, when $600 weekly payments from the initial CARES Act were in effect, jobless renters were spending 31% of their unemployment income on rent, the real estate data firm Zillow said this week. In November, before the current stimulus package was passed, the typical unemployed renter living alone spent 84.5% of their unemployment income on rent.
Zillow said that while the $300 in weekly payments that are part of the latest stimulus package will help renters maintain their housing, unemployed renters will still be severely cost-burdened. The current CARES supplement will lower the rent share to 45.5%, well above the 30% threshold that has been linked with rising homelessness rates in a community.
The MHA rent-payment surveys, which were launched several months ago and don't include the vast majority of income-restricted rentals in the region, have consistently shown that working-class renters have been disproportionately affected. They are mostly like to be people who work in the service sector and other industries that have seen the biggest job losses and wage cuts. Those lower-income renters also tend to live in the least-expensive rentals, which are also most scarce and least likely to offer rent discounts and the kinds of rent concessions that are being offered in the newer, more-expensive buildings which tend to be in downtown Minneapolis and St. Paul, where thousands of units have been built over the past several years.
In both cities the average apartment vacancy rate has been hovering near double digits, forcing leasing staff to offer rent concessions that often include a month or two of free rent. Most suburbs, however, are still suffering from a lack of rentals, especially income-restricted and market-rate rentals.
At the end of September the average vacancy rate across the metro was 3.6% for buildings not still being leased, an increase of more than a percentage point compared with last year, according to a third-quarter report from Marquette Advisors. The average rent in the metro was $1,293, slightly lower than the previous quarter but 2.2% higher than last year.
In downtown Minneapolis, where the average vacancy rate during the third quarter was 11.1%, including new projects that are still in the lease-up phase, it was a renters market.
The MHA said in its news release that it anticipates more than $300 million in rental and utility assistance for Minnesota renters as part of the latest federal COVID relief package and it is encouraging the state to use that assistance to create an off-ramp to Gov. Tim Walz's eviction moratorium.
According to the National Multifamily Housing Council, 76.6% of all households across the country made a full or partial rent payment during January. That was a decline from last year at the same time, but a slight increase compared with December.
Jim Buchta • 612-673-7376