The Minneapolis vs. St. Paul rental cost ramp

Keeping in line with my New Year’s resolution to better informed about stuff, I bought a Star Tribune last Sunday. In it, I noticed a nice, big chart under the homes section titled “Figures for rental properties, 3rd quarter of 2013.”

The data shows average rent, number of units, and vacancy rate for various apartment sizes across Minneapolis, St. Paul, as well as the Suburbs North, East, Northwest-West-South of the Twin Cities, and Suburbs South of the Minnesota River.

A few things jumped out at me as I looked over the numbers:

  • The St. Paul vs. Minneapolis price ramp: The difference in rent between Minneapolis and St. Paul for a studio apartment is $8 ($757-$749), for a 1 bedroom this number grew to $123 ($962-$839), and for a 2 bedrooms it was $300 ($1335-$1035). Interestingly enough, for 3 bedrooms the difference broke the trend of increasing cost difference as more bedrooms were added and fell back down to $18 ($1,446-1,428). Why is that?
  • Lack of large apartments: The largest apartment size listed in this dataset was the 3 bedrooms + den / 4 bedrooms, used interchangeably I assume. While suburbs located South of the Minnesota River had 231 of these units, Minneapolis proper had zero(!) and St. Paul, North Suburbs, and East Suburbs all had less than 5 individually. Curious that Minneapolis/St. Paul have none/so few large apartments. I wonder if this is an effect of people with more than two roommates choosing a house instead. We certainly have a lot of those in the Twin Cities.
  • Lack of large apartments, pt 2: On second thought, I’m almost sure these numbers are incorrect — I was at a friend’s 4 bedroom apartment in Minneapolis just this weekend, why wasn’t that counted? Unfortunately the Strib doesn’t list much on this study’s methodology.

I loaded the data into a spreadsheet which you can view here, crunched the numbers and came up with a few summaries. Visualizing this data is important, but also deriving further statistics from what we’re given (such as rent paid by an average person, which I estimated as SUM[(avg rent price per unit) * (unit occupancy rate) * (number of units)] / SUM[(number of bedrooms)*(unit occupancy rate)*(number of units)]) proved fruitful. Here’s what I found:

Average rent an apartment-dweller pays in the Twin Cities

  1. Minneapolis – $817.49
  2. St. Paul – $644.06 (79% of a Minneapolitan’s rent)
  3. S of MN River – $575.11 (70% “)
  4. East Suburbs – $574.11 (70% “)
  5. North Suburbs – $527.56 (65% “)
  6. NW-W-S Suburbs – $399.56 (49% “)

   

The “ramp” effect shown in the bottom chart is probably the most significant finding. Overall, renters in St. Paul pay just about 80% of those in Minneapolis, but I’d guess there’s huge variability between that number. As an individual who lives in a 2 br with a den in Minneapolis, the data show I have a good reason to be jealous of people who live across 280. On the other hand, if my apartment had another bedroom, we’d be almost exactly on parity.

The only mechanics I can think of that would cause this trend have to do with demand affected by college students or the number of houses available. At a glance, the vacancy rates don’t seem to far off between Minneapolis and St. Paul, though as I mentioned, the data is all available here for you to poke through some more.

Some followup questions into this phenomenon would be:

  • Why are the rents for studio apartments and 3 bedroom units in Minneapolis and St. Paul essentially equal?
  • Why does the price for all other Minneapolis units accelerate as bedrooms are added, and what sets that rate of change?
  • How did this study count apartments?

This post was written by Tom Johnson and originally published on Stubble. Follow Stubble on Twitter: @stubblemag.

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Comments (5)

  1. Submitted by Joey Senkyr on 02/18/2014 - 09:16 am.

    4 bedroom apartments in Minneapolis

    While they seem to be rare outside of the University area, four bedroom apartments are pretty common in Dinkytown/Marcy-Holmes and Stadium Village/Prospect Park. Unless the study was specifically not counting apartments aimed at students, it sounds like their methodology was flawed. Many student apartment buildings have renters sign individual leases per room, so depending on how they collected data, maybe the four bedroom units are being counted as four separate apartments?

  2. Submitted by Nickey Robo on 02/18/2014 - 11:33 am.

    Is it possible the study did not count duplexes? Every 4 bedroom apartment I’ve seen in town has been the upper half of a duplex.

  3. Submitted by Connie Sullivan on 02/18/2014 - 02:28 pm.

    My guess is that the Star Tribune figures are based on non-University-area big apartment complexes that choose to be counted. Houses and duplexes are probably not included.

    The U-area buildings that rent space by the bed (not by the bedroom, even; by the bed) are so not-comparable to what real people live in, despite having ostensibly four- or five-bedroom units, that the powers that be simply don’t count them. If they did, Minneapolis would have thousands of such units.

    So: selective inclusion rules here.

    Further, University-area houses with three or four or five bedrooms are not counted in these figures because they are not big managed properties (not eight- to 60 units, etc.). But the kicker is that their rents are atrociously out of line with “normal” apartment or house rents, because here, too, greedy landlords ignore the larger market and sock student-age renters with about $500 to $750 per bed, per month, plus utilities. Thus, a four-bedroom house with four college-age students renting would rent for $2000 to $3000 per month, plus utilities (landlords near the U seldom if ever pay utilities). The norm, however, is higher than that, once you include the illegal overoccupancy of bedrooms in basements and attics and converted front and back porches: a house could net a landlord $6000 a month or more, if he adds enough beds/bedrooms. (His property taxes might be $2500 or so.)

    Lots of pertinent information is left out of the data studied in this article, which does raise good questions on the whole.

  4. Submitted by Janne Flisrand on 02/18/2014 - 09:54 pm.

    Cost by location

    Given the huge and growing portion of household budgets going for transportation, it would be interesting to see the average rent graphs using the Housing + Transportation Affordability Index from CNT.

    http://htaindex.cnt.org/

  5. Submitted by Dan Hylton on 02/20/2014 - 11:22 am.

    methodology

    Hi Tom,

    The data comes from a market research firm called “Marquette Advisors” and their methodology consists with surveying large management companies about apartment buildings with 10+ units. The data definitely does not include the “rental house” (or duplex, or condo, or townhome) phenomenon which, as you suggest, is a lot more prevalent in the core cities.

    Just curious: was your friend’s 4 bedroom apartment in a <10-unit property?

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