It’s been one of the worst years in history for home builders, but not in Minneapolis. This year alone the city says that it will issue permits to build more than 1,500 new housing units — mostly rental apartments, according to the Minneapolis Community Planning and Economic Development. That’s double last year’s total and likely the highest number of units for any metro-area city since at least 2006 when the city issued 1,571 permits.

It’s a boom that’s being fueled by the convergence of two trends: a return to city living and a growing preference for rental housing over homeownership. Mary Bujold, president of Maxfield Research Group, said that while the data speaks to a recent, but massive shift in the housing market, several of the proposed projects have been in the works for years. “It’s not like someone just woke up and said we’re putting up 300 units,” she said.

With the average vacancy rate in Minneapolis at about 2 percent during the second quarter, according to Marquette Advisors, developers have turned their attention to apartment construction, which has been one of the few growth areas for the industry. In the Twin Cities this year about half of the planned units are rentals.

Nationally new home sales this week fell to new lows, and 2011 is expected to be the worst year on record for the industry. The US Census Bureau said Tuesday that new home sales during July had fallen from June and were lower than analyst expectations. In Minneapolis more than 60 percent of the projects in the pipeline are rental housing, according to Tom Streitz, the city’s director of housing. And that’s happening even though the city has less money to subsidize development. Only one-third of all units will receive a subsidy, including 180 units at Longfellow Station, a site where abandoned grain elevators were razed to make way for new housing. “There’s a real pattern emerging,” he said.

That pattern, Streitz said, is growing interest in urban living, especially among young professionals and empty nesters who don’t want to make a commitment to homeownership at a time when prices are still falling. That’s helping drive redevelopment of once-industrial neighborhoods that run parallel to the Mississippi River. In the Warehouse District, for example, developers are snapping up historic buildings and converting them into loft-style apartments. And in the Mill District several small parcels are slated for upscale rental housing.

For sale housing is part of the mix, as well. Twin Cities Habitat for Humanity plans to build or rehab 60 for-sale houses in the metro area, including 16 townhouses in Minneapolis, according to its communications manager, Matt Haugen. Even in a market in which house prices in some areas have returned to pre-boom levels, affordability is still an issue. Especially with little upward pressure on wages. The non-profit sells its houses to people at a price that ensures that they will pay only about one-third of their income for their mortgage payment. Habitat is increasing its production goals in 2011 compared with 2010 because it can take advantage of lower land and labor costs to build its houses more affordably. “There’s a lot of opportunity right now,” he said.

According to the Minneapolis data the city permitted construction of 1,571 units in 2006, but hit a bottom in 2009 when it permitted only 274 units. That year the city tied with Blaine for the second-most permits. Shakopee was No. 1 at 328.

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