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A majority of Minneapolis’ households now rent their homes

The shift comes as many are calling for more renter inclusion in neighborhood organizations as part of Minneapolis’ Neighborhoods 2020 plan.

Between 2008 and 2015, Minneapolis' share of renter households grew from 49 percent to 53 percent, making renters the majority of households in the city.
MinnPost photo by Peter Callaghan

Minneapolis is trying to figure out how to give its resident renters a bigger say at City Hall. At least, that’s one of the goals of its new Neighborhoods 2020 plan, a set of recommendations designed to help guide the city as it tweaks the way neighborhood groups operate.

Minneapolis’ neighborhood organizations are 70 nonprofits that host events and give officials input on things like planning. They don’t have any statutory authority, but they do receive money from the city and have a lot of informal power. And with surveys finding the majority of board members to be white and homeowners (the most recent, released in February, found 82 percent were white and 83 percent were homeowners), some say their balance of power is skewed against renters.

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Pressure to come up with ways to include more renters in the groups coincides with an underlying shift in the makeup of Minneapolis in recent years: Between 2008 and 2015, the city’s share of renter households grew from 49 percent to 53 percent, making renters the majority of households in Minneapolis, according to data from the American Community Survey.

But that shift has been uneven, meaning any push to make Minneapolis’ neighborhood groups more reflective of the population they represent could mean very different things in different parts of the city.

Losing homes

Minneapolis isn’t the only place that’s seen an increase in renters: In 2017, a larger share of Americans were renters than at any point since at least 1965, according to the Pew Research Center.

Experts say the Great Recession is largely responsible. When the housing bubble burst and the economy entered recession, many homes went into foreclosure as owners were unable to make monthly mortgage payments, and many people who were once homeowners became renters.

Eventually, many homes, sold for bargain prices in a bottomed-out housing market, were bought by investors who turned them into rental properties. Now that the economy has been in recovery for a while, some of these homes are being sold to owners who live in them again, but many remain rentals.

The forces that have shaped the market since the housing crash have affected different Minneapolis neighborhoods in different ways, however. Some north Minneapolis neighborhoods, like Folwell, for example, saw big increases in the share of renter households. Between 2000 and 2015, Folwell went from 23 percent to 53 percent renter-occupied, while the number of households overall declined. Other Minneapolis neighborhoods, like Jordan, which went from 40 percent renter to 53 percent renter, saw an increase in renters without a decline in overall households.

Source: U.S. Census Bureau, compiled by Minnesota Compass

Richer renters

The increase in the share of renters isn’t only due to people who previously owned homes becoming renters after the housing market crash, though. It’s also being driven by people who might have in the past become homeowners remaining renters for longer — even indefinitely.

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Even as the economy began to recover from the recession, young people who might have been able to afford homes in early adulthood in the past can’t necessarily find places that fit their budgets.

That phenomenon is particularly noticeable in the Twin Cities’ starter home market (often defined at homes that cost $250,000 or less), where there is often fierce competition among buyers when the few such houses go on the market.

As a result, many people who in the past would have had money to buy homes now rent instead. In the Twin Cities region, the number of renter households making more than $50,000 per year increased by more than 27,000 between 2000 and 2014, even as the number of renters who make less than $50,000 per year has remained relatively stable.

Twin Cities renter households by income, 2010 versus 2014
Source: U.S. Census, compiled by Minnesota Housing Partnership

The trend is doing a couple things to the housing market: first, it’s creating incentives for landlords to fix up properties to attract higher-income renters and for developers to build apartments attractive to these high-income renters. Second, it’s making it harder for many renters to save up to buy a home, since they are now paying more to rent apartments.

And that’s assuming those renters want to buy a home at all.

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The Great Recession changed ideas about homeownership in the U.S., said Dan Hylton, research manager at HousingLink, a Twin Cities nonprofit that connects people to affordable housing. Culturally, “We had really promoted the idea of home ownership as the only type of lifestyle to aspire to up to, until really the housing crisis of [the Great Recession], and at that point, there was a lot of shift in the mindset of people, especially millennials,” he said.

While some people want to own homes but remain renters because they can’t afford it, some who could afford to buy homes are making a deliberate decision to remain renters. That’s especially the case as urban cores are redeveloped with amenities like taprooms and walkable neighborhoods. “I think there’s been some permanent shifts in how cities think about how they develop and how they build,” Hylton said.

As people shift careers and move around more, many of them are also attracted to the flexibility of renting.

Between 2000 and 2015, Loring Park saw a small increase in the share of its homes that were renter occupied — from 81 percent to 83 percent, but saw a sizable increase in its number of renter occupied units.

Demand for housing near downtown is driving a boom in both owner-occupied and rental housing in neighborhoods like the North Loop and Downtown West.

North Loop
Loring Park
Source: U.S. Census Bureau, compiled by Minnesota Compass

While the share of renters has decreased in these neighborhoods, the number of renters and homeowners alike has ballooned as these once sparsely-populated districts become popular neighborhoods.

Owner and renter-stable

Other Minneapolis neighborhoods haven’t seen much of a change in their share of renters. In fact, many of Minneapolis neighborhoods for which consistent data are available have barely seen any change in their share of households that are renters at all.

These neighborhoods generally fit into a couple of categories: neighborhoods like Lynnhurst, by the shores of Lake Harriet, which are largely single-family homes that tend to change hands from owner to owner. A small share — 11 percent of units — are renter-occupied.

Or places like Whittier, near downtown, where the majority of residents are renters and have been for a long time.

Source: U.S. Census Bureau, compiled by Minnesota Compass

How Minneapolis will handle the balance of renters, some of them changing, and some not so much, across its neighborhoods has yet to be decided.

The city is currently collecting feedback on the plan. The guidelines will go to the City Council in April, with specifics slated to be approved by the council in the fall.