No rental bubble in Twin Cities – yet

  • Article by: Jim Buchta , Star Tribune
  • Updated: August 13, 2013 - 10:04 PM

Vacancy rate still falling while rent prices rise, driven by empty nesters, Gen Yers.

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CullenAug. 14, 13 7:50 AM

As an Apartment Building Broker, I generally agree with this article. But I would like to make two comments First, "real rents" haven't increased since 2001. What I mean by "real rents" is the cost of the same apartment -- not a nicer, or larger or better located apartment. The same apartment. rental housing slipped into a recession in 2001 and didn't come out until just recently (approximately 2011). The rest of the economy recovered with the housing bubble only to then worsen. This industry saw falling revenue throughout the housing bubble. Some people may argue the cost of the same apartment shouldn't go up with time, but that only makes sense if the cost of utilities, labor, government, etc also doesn't go up with time. Second, I know Brent Wittenberg and he isn't predicting a 10% vacancy rate in 2014. I haven't confirmed that with Brent, but there is no way this industry will go from 2.3% vacancy rate in 2013 to 10% in 2014. Jim Buchta, an author I like and respect, got something wrong.

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tabasco628Aug. 14, 1311:43 AM

There is a significant difference between high-end, fancy apartments that can be flipped into condos when the market changes and regular apartments.

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theagonybhoAug. 14, 13 3:13 PM

The news last night reported 20,000 new apartment projects in the state, i would guess in about 2-3 years the vacancy rate will go up.

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