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Reduced Single-Family Affordability and Tapering
Supply Keep Apartment Metrics Well-Positioned
More transplants are choosing to rent. While the monthly mortgage payment on a median-priced home was below the average effective Class A rent as recently as 2020, that dynamic had inverted as of March 2024. The rise in single-family housing costs coincided with the return of net in-migration to the metro for the first time since 2019, directing many higher-earning transplants to top-tier apartments. Net absorption nearly kept pace with an all-time high delivery slate over the 12 months ending in March, with greater levels of concession use helping marketwide Class A vacancy dip by 10 basis points year-over-year. In the more affluent suburbs of Eden Prairie-Shakopee-Chaska, Minnetonka and Bloomington, the portion of units offering concessions grew by over 300 basis points in the span, contributing to local records for net absorption.