13,000 – that's the number of new apartments that will have been added to the Twin Cities metro area in just 2 years (2018 and 2019). That figure comes from Jim Buchta's Star Tribune piece, "Apartment construction has been booming in the Twin Cities, but is about to boom even more". As indicated by the "has been booming" part of that title, the 13,000 new apartment rental units is on top of the 24,000 units that have been added over the past 8 years. The huge increase is due to the fact that there's been consistently high demand (measured by a persistently low vacancy rate of about 3.5% for the past several years). Developers are therefore putting their money towards a pretty safe bet.
The article gives a few reasons why the apartment vacancy rate has been low, even with all the new inventory. First, the local economy has been strong, meaning more jobs have been added and more people need a place to live. Second, more people have been test-driving the whole "city living" concept because it's grown in popularity, many baby boomers are downsizing, and entry-level/lower priced homes are in very short supply. So, developers will keep adding inventory until a balance has been reached, which usually means they've over-supplied and vacancy rates will climb.
With new apartments flooding the market at that increased rate, one would think that rentals will soon be oversaturated, causing landlords and property managers to offer deals in order to entice renters. Well, the article says not so fast. Much of the construction has been focused in popular Minneapolis and St. Paul, and construction is only really now moving out to the suburbs. The article does, however, point to downtown Minneapolis as a potential first spot for vacancy rates to climb due to the overabundance of new units in the neighborhood. It's important to note that the vast majority of new rental units are market rate or luxury; subsidized housing is still in short supply.
On the other hand, if you're at the point where you'd like to own your own home, or even if you'd like to sell – please reach out!
Cover photo from morguefile.com