Fewer bought homes, yet hiring jumped for those in the rental market.
Who knew? The slump in the housing market is giving a segment of the job market a lift.
There was a 10 percent jump in new real estate jobs in Minneapolis in the second quarter of 2011 compared with the same period in 2010, according to the Minnesota Department of Employment and Economic Development. It attributed the growth, the biggest in any employment category in the city, to the rental market, which has flourished as it has become tougher for people to buy homes or to hold on to them.
During the quarter, the latest available, there were 6,474 real estate, rental and leasing jobs in Minneapolis, up 9.8 percent, the department said. The vast majority of the jobs were associated with rental housing, including property managers, leasing agents and maintenance staff.
"This is a big expansion, one of the biggest we've had in a long time," said Barbara Halverson, president of Steven Scott Management in Minneapolis.
Throughout the city, developers have plans to build thousands of apartments to satisfy growing demand for rentals. The foreclosure crisis and tighter credit standards have made it difficult for people to qualify for mortgages. Many aren't willing to take a chance on a still-fragile housing market.
The average vacancy rate has fallen over the past couple of years, bottoming out at about 2 percent. Vacancies are even lower in some parts of the city -- including downtown Minneapolis, where there is strong demand from transferees who aren't willing to buy because they don't know how long they'll be working in the city.
Steven Scott, for example, has about 400 employees in the Twin Cities area; it plans to add 40 more over the next 12 to 18 months to help staff at least three new apartment communities with about 200 units that will be built by other companies but be managed by Steven Scott.
Halverson said that while the number of new openings in the city is only a drop in the bucket considering the size of the workforce, these new jobs pay well. She estimated that each new project coming online will add four to eight jobs, but many projects have more.
The recent increase in the number of real estate jobs in the city is unprecedented during at least the past decade.
"That's a much more rapid rate of growth than we've seen in that sector in a long time," said Steve Hine, research director for the Minnesota Department of Employment and Economic Development.
Though the rental boom is happening across the state, it's focused in the Twin Cities and inner-ring suburbs where there's strong demand from empty nesters, young professionals and families who want the flexibility that renting offers. Krista Berget, communications director for the city's Department of Community Planning and Economic Development, said that last year Minneapolis added 985 new residential units, including 616 from "new construction" and 369 that were converted from buildings that formerly had non-residential uses.
That gravitation toward the city has caused a decline in real estate, rental and leasing jobs statewide and in the metro area.
The results don't include construction jobs, nor do they reflect the number of real estate agents or people working in the mortgage industry. Most of them are considered self-employed.
In fact, the broader real estate industry has suffered serious declines in the number of people working in the industry. In Minnesota, for example, there were 10,000 fewer licensed real estate agents last year than there were in 2005.
Hine said that while the number of jobs is relatively small compared with other industries (there were almost 1,100 new jobs in the health care and social assistance category), it's a positive indicator of a broader -- and positive -- economic trend, including a long-awaited increase in the number of new households, which is happening as people who are sharing housing feel confident enough to seek their own.
"These numbers are the consequence of an improved ability of people to start setting off on their own," Hine said. "The recession reduced the opportunities that a lot of young people had in getting their own place."
Jim Buchta • 612-673-7376