Why this is important
A sufficient stock of housing, including rental options, is important for mobility and attracting residents to the jobs and opportunities in the county. Some vacancy is normal in order to accommodate fluctuations in the market. A high vacancy rate can mean that more renters are moving into home ownership or are taking on roommates instead of renting alone. A low vacancy rate can signal an insufficient stock of housing and can make it difficult for renters to find housing.
What the data show
The annual Dakota County Rental Market Survey, conducted by the Community Development Agency (CDA), covered 21,214 rental units in 2012. The survey showed that the overall vacancy rate decreased to 2.8%, down from the 2011 vacancy rate of 3.4%. The nationwide measure for a healthy vacancy rate is 5%. According to the CDA,
“Almost all of the individual cities surveyed in Dakota County have vacancy rates below 4%; Burnsville and Eagan are the lowest at 2.49% and 2.52% respectively. West St. Paul and South St. Paul had vacancy rates under 5%, the first time in two years. Historically these two cities have had elevated vacancy rates above 7% Farmington had the highest vacancy rate this year at 7.58%.” (CDA 2012 Rental Market Survey, page 10)
The peak in the vacancy rates in 2004 reflects a time when mortgage interest rates were very low and when lending standards and products allowed a large segment of the population to purchase rather than rent housing.
The vacancy rate for Dakota County has dropped sharply from 6.9% in 2010 to 2.8% in 2012, a 4.1 percentage point reduction from 2010. This is the lowest vacancy rate in a decade. GVA Marquette Advisors also reported the residential vacancy rate (2.8%) in the first quarter of 2012 in the Twin Cities metro area is at a 12-year low.
The primary reason for vacancies throughout Dakota County continues to be employment changes (job loss or relocation) and home purchases. Conversely, the reduction in the vacancy rate has been attributed to employment changes, renters holding off to purchase a home, people who have gone through foreclosure of their home, and stricter lending practices.