Twin Cities multifamily housing starts down again in November

By BRIAN JOHNSON

BridgeTower Media Newswires

Twin Cities homebuilding activity followed a familiar pattern in November as permits for single-family homes were up by double digits compared to last year and planned multifamily units were down dramatically.

During the month, cities in the 13-county metro area permitted 856 new housing units overall, down 13% from November 2023, according to the Keystone Report. That includes 660 single-family homes, up 15%, and 196 multifamily units, down 52%.

The year-to-date totals now stand at 7,700 units permitted overall (down 23%), including 5,860 single-family houses (up 15%) and 1,840 multifamily dwellings (down 65%), according to Keystone.

With the 660 homes permitted, last month was the best November for single-family housing starts since 2020. Specifically, the metro area saw 573 November permits in 2023, 389 in 2022, 619 in 2021 and 701 in 2020, according to Keystone data.

“Obviously, the multifamily challenges are a different element of the housing discussion, but from a single-family standpoint, it’s a strong November, slightly above the standard water line,” said James Vagle, CEO of Housing First Minnesota.

Even so, construction isn’t keeping up with the need for new homes, according to Housing First Minnesota. The state is looking at a shortfall of 106,000 units, Nick Erickson, senior director of housing policy for Housing First Minnesota, said at a recent forum.

Vagle said Wednesday that the demand isn’t going away.

“There’s a structural imbalance between the demand for housing and the housing available. The only way out is to build our way out,” he said.

On the multifamily side, the biggest project permitted in November was a 172-unit affordable apartment building in Burnsville. Finance & Commerce reported in October that Roers Cos. bought and demolished two office buildings to create a 4.47-acre site for the project, known as Volta.

A certificate of real estate value filed with the Minnesota Department of Revenue reveals that Roers created the new lot at 175 Burnsville Parkway W. after paying just north of $5 million for the buildings at 151 and 201 Burnsville Parkway.

But the Burnsville project was an outlier. Overall, multifamily construction took another step back in November after a brief sign of life in October, when planned multifamily units increased for the first time in nearly a year.

The monthly and year-to-date Keystone numbers are consistent with the findings of a newly released Federal Reserve Bank of Minneapolis survey, which includes responses from more than 300 construction businesses in the Twin Cities and beyond.

Ron Wirtz, Minneapolis Fed regional outreach director, noted Tuesday that single-family homebuilding is seeing some growth this year after a “fairly consistent decline” from 2021 to 2023.

“If you go over to multifamily, there’s a less good story there. What we’re seeing is that there’s further decline in that sector,” Wirtz said.

“Unfortunately, given that there’s a longer pipeline to development for these particular units, I think that’s also one of the reasons why some non-residential commercial contractors are seeing that there’s some slowness in this space.”