MHP's June 2015 2x4 Report, released today, found that low rental vacancy rates and rising rents have led to competition for lower-priced units, at least in the Twin Cities where regular data is available. Minnesotans with low incomes are at greatest risk in this tight rental market.
According to data in the report, the overall rental vacancy rate for market-rate units was 2.7%. But for those renting for $1,000 or less, only 2.0% of units were vacant in the first quarter of 2015.* To afford an apartment that costs $1,000 per month, a family would need to earn $40,000 to avoid paying 30% or more of its income for housing, the federal standard for housing affordability.
With rising demand for rental units nationwide and in Minnesota, housing construction in the state is beginning to rebound, particularly for multi-family units, the report found. Through May of this year, 7,000 units were permitted statewide, the highest since 2006. Of these units, a record 39% were multi-family units.
Last month, over 50 people from seven different states gathered in Billings, Montana for a regional convening of western, rural Sustainable Communities Initiative (SCI) grantees. The SCI is a grant program designed by the Partnership for Sustainable Communities (PSC), a federal interagency partnership, which supported communities in regional planning to improve access to affordable housing, increase transportation options, and lower transportation costs while protecting the environment.
Renewable energy, especially solar, is of great interest to affordable housing developers from both a financial sustainability and mission perspective. However, effective practices and financing systems are still emerging in Minnesota.
In May, the MHP Investors Council hosted a breakfast discussion focusing on alternative energy sources for affordable housing. Minnesota Housing Commissioner Mary Tingerthal moderated a thoughtful discussion about current projects, challenges in implementation, and the future of alternative energy in multifamily housing on both a statewide and national level. Panelists included Michael Bodaken from National Housing Trust, Gina Ciganik from Aeon, and Vihar Sheth from US Bancorp Community Development Corporation. More than 80 additional leaders representing the Investors Council and its guests, from all sectors of the affordable housing industry, participated in the event.
At the May Minnesota Housing Finance Agency meeting, the board awarded funding to preserve affordable housing and approved plans and selections while staff reported on the Greater Minnesota Rental Rehab Demonstration Loan program and the homeownership capacity initiative. There was also an update on the legislative session and what Minnesota Housing could expect for funding in the special session.