Dakota County gets a new look at its future housing needs

An ambitious study of Dakota County's housing market has signaled a strong and growing need for rentals for people of all ages and income levels — and a spurt of recent announcements about new apartment projects is unlikely to make a significant dent.

The demand for rentals, especially in less-developed communities with more room for growth, was one the central conclusions of the latest housing needs study recently completed by Maxfield Research Inc. for the Dakota County Community Development Agency (CDA). The study is an update of an original survey done in 2005 for the CDA by Minneapolis-based Maxfield.

The research calculates demand until 2030 for a wide variety of housing types — single-family, multiunit, for-sale and rental for the general population, seniors and people with special needs.

The study noted that the county has some catching up to do with rental housing.

The researchers found that since 2000, 134 projects with 1,888 market-rate units have been built, with very few being added since 2005. Those under construction or in the planning process include four in Eagan — a 190-unit apartment building in the Cedar Grove redevelopment area, a 250-unit apartment building north of Yankee Doodle Road and west of Central Parkway, a 34-unit senior rental project at 4135 Old Sibley Hwy. and more than 200 units in and next to an office building previously occupied by Blue Cross and Blue Shield of Minnesota. Another in Apple Valley would add 322 apartments, 20 percent of them affordable units, in the Central Village redevelopment area.

But those projects will have a limited overall impact on the county's vacancy rate for apartments, a slim 2 percent.

"Rental vacancy rates have hit new lows in some communities … tightening vacancy and increasing rents have resulted in low and moderate-income households experiencing much greater challenges to secure affordable housing," the study said. "For some individuals and households that face significant barriers to finding suitable housing, the housing situation is at a critical level."

The study says that between 2010 and 2030, 30 percent of the demand in the county will be for rental housing. That's up from the projection of 23 percent in the 2005 survey.

The county's housing market, like those nationwide, has changed dramatically since the last study. In 2005, healthy economic growth was fueling heavy demand for owner-occupied housing, with more renters embracing home­ownership. The recession, housing downturn and foreclosure crisis were still barely on the horizon.

After the recession's slump, sales of new and existing single-family homes have revived in the past few years while foreclosures have tailed off. Dakota County recorded its third consecutive annual decline in foreclosures on residential and commercial properties in 2013, according to the CDA. Sheriff's sales for the year totaled 925, down from 1,525 for 2012 and substantially less than 1,985 for 2011 and 2,147 for 2010. The report didn't break out how many of the foreclosures were homes or how many were commercial or industrial buildings.

The researchers said Dakota County has been the leader in the metro area in developing affordable housing, including housing for seniors and workforce townhouses. It added that the need for affordable housing — both rental and for-sale — will continue, with demand especially acute for people with extremely low incomes.

Rising land, labor and material costs have reduced the number of newly built homes priced below $250,000, the study said. It added that it's likely that more modestly priced houses in the future will come from rehabbing the existing stock.