Homebuilders in the Twin Cities had their best January in several years. Permits to build single-family homes increased slightly compared with last year, but apartment construction quadrupled, according to a monthly report from Housing First Minnesota.
During January, homebuilders were issued 504 permits to build 1,798 housing units — the most for any January in at least a decade. Multifamily housing, mostly luxury rentals, accounted for three-quarters of those units.
“Following the worst decade of housing production in 60 years, we’re pleased to start off the new decade with a strong month of new homebuilding,” said Gary Kraemer, president of Housing First Minnesota, in statement.
Rentals have and will dominate the industry this year, but builders are optimistic that low mortgage rates and a shortage of entry-level houses will goose demand for new for-sale homes in the metro, where residential construction far exceeds commercial work.
On Thursday, Dodge Data & Analytics said that during 2019 there had been more than $4.8 billion in residential construction throughout the 13-county metro, an increase of 7% over last year, and $1.5 billion more than the commercial sector, which saw a 22% annual decline for the year.
If January is any indication, it will be another solid year for homebuilding. During the month, 453 permits were issued to build single-family houses, 3% more than last year at the same time.
Nearly a quarter of those January permits were issued in Lakeville and Woodbury, but Plymouth, Corcoran and Shakopee all accounted for at least two dozen single-family permits each.
“Our housing market is drastically undersupplied throughout the chain of the housing spectrum and we need all types of housing in order to serve Minnesotans,” said Kraemer.
That’s especially true for suburban rentals, which is why Marquette Advisors expects 2020 to be a record year for Twin Cities apartment construction. In January, developers were issued permits to build 1,345 multifamily units compared with just 309 units in January 2019. Minneapolis, which has been the epicenter of the rental boom, accounted for nearly 400 units in two projects during the month, and in Woodbury, where half as many units were permitted.