The Twin Cities apartment market remains one of the tightest in the nation.
New data from the American Community Survey show the median monthly rent of $963 in the Twin Cities metro is 4 percent, or $42, higher than it was five years ago, after adjusting for inflation.
That puts the Twin Cities in the top one-third of all major U.S. metros for growth in median rent.
“The numbers are consistent with what we are seeing,” said Mary Bujold, president of Maxfield Research, a Twin Cities company that tracks multifamily development.
She said rents have been going up from 3 to 10 percent annually, a variation shaped by the age, location and amenities of a building. In older buildings with no amenities, increases have been small. New buildings have seen bigger jumps.
“They are likely going to pay potentially even 20 percent more than they were paying before,” she said. “If they just stay where they are, then they are usually getting rent increases of anywhere between $20 to $25 per year.”
Nationwide, the total median cost of monthly rent was $949, a $21 increase over that previous five-year period. The health of a local economy is one of the most significant indicators of where the gains are the strongest.
In the Midwest, the biggest rent increases were in the Dakotas, where the oil boom created sudden and deep demand for rental housing. Bismarck, the capital of North Dakota, had the third biggest rent increase nationwide, with the median increasing 22 percent to $775.
Nationwide, Odessa, Texas, another oil-boom area, saw rents increase the most — a 28 percent jump to a median of $934 a month.
Some communities saw significant declines. Carson City, Nev., for example, had one of the biggest declines with monthly rents falling about $150.
The survey differs from many in that renters are asked how much they are paying for rent, and the median is generated from surveys collected over a five-year period. Many local surveys track the median rent of all properties that are available for rent, so those figures can be statistically influenced by changes in the kinds of rentals that are hitting the market.
Compared with a quarterly or one-year survey, the American Community Survey’s five-year estimates provide a better sense of the broader trends in a market.
The Twin Cities, for example, has been flooded with new apartments, but it’s still consistently ranked among markets with the tightest supply in the nation.
The region is expected to finish this year with a tally of 3,500 new units and even more in the coming year, according to a third-quarter report from Marquette Advisors.
That report, which tracks posted rents by property managers in the majority of the large apartment properties, said the average market rent in the region this year was $1,147, a 5.1 percent annual increase.
This growth rate reflects rent increases at existing properties as well as the opening of several new upscale apartment buildings. New buildings, while relatively few compared to existing ones, are so much more expensive than existing properties that they push the overall market average higher.