RENTAL RATES: Low inventory likely to cost Twin Cities tenants - KMSP-TV

RENTAL RATES: Low inventory likely to cost Twin Cities tenants

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If you thought rent in the Twin Cities couldn't get any higher, brace yourself. There simply isn't enough housing to go around, so tenants shouldn't be surprised if their landlord hikes the monthly rate.

Landlords know the market puts them in the position to charge more. With demand up, and no renter's cap in sight, housing experts expect to see an over-supply of high-end housing while those in lower income brackets are getting priced out of the market.

"[My rent] was $680s. Now, it's $710," Linda Johnson told FOX 9 News. "They said 'due to increased expenses.'"

Johnson said the monthly checks she writes to stay in her Richfield home have shot up three times over the past four years. Although she's lived in her complex for two decades and her rate had increased by $5 a year before, she said she knows something else is going on now -- and housing experts say she's right.

"It's such a complex economy that it's just people trying to find housing that fits whatever income they have," Chip Halbach, executive director of the Minnesota Housing Partnership, told FOX 9.

The vacancy rate of apartments that cost less than $1,000 per month is diminishing quickly in the metro. Since last quarter, the vacancy rate has dropped to just 2 percent.

"A 2 percent vacancy rate is practically a 0 percent vacancy rate. It's so hard to find an apartment here in the Twin Cities with that trend around," Halbach said.

This quarter, the average cost of rent in the Twin Cities is $979 -- a rate that's up 9 percent from three years ago. As demand soars, so can the sum landlords can charge.

"There's no cap on rental increase in Minnesota," said Matt Eichenlaub, a housing attorney with Homeline, a non-profit tenant advocacy group.

With landlords in the driver's seat, negotiating rental price may be out of the question completely.

"Some are willing to give a discount if you do work around the place, but it is a very difficult situation to negotiate in for a tenant right now," Eichenlaub admitted.

Eichenlaub also said people on the low end are getting pushed out of the market altogether.

According to the Minnesota Housing Partnership, the average number of homeless families in Hennepin County has risen. The average number of families without a home in Hennepin County is up 17 percent over last year.

"The federal government recommends you spend about a third of your income on rent. There are a lot of people out there where $1,000 is a lot more than one third of their income," Eichenlaub said.

Both Eichenlaub and Halbach have a suggestion for anyone who thinks it's unfair that there is no rental cap in the state.

"Tell your lawmaker you think there should be a rent cap is in order," Eichenlaub recommended.

Neither of the housing experts who spoke with FOX 9 see this trend abating any time soon. For anyone looking for some free legal advice, both organizations are happy to help.

Online resource:

- Homeline: http://www.homelinemn.org/
- Minnesota Housing Partnership: http://www.mhponline.org/

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