It's hard to not notice all the apartment complexes in the Fargo-Moorhead metro area. In the last five years alone, 6,000 apartment units have been built, according to metro building permit data.
But perhaps more telling is Fargo had 30,000 rental units as of 2017 — two years ago — according to U.S. Census Bureau estimates. That represented 57% of all housing units in the city.
That rental unit percentage is way higher than regional peer cities. Sioux Falls, S.D., Duluth, Minn., and Bismarck had rental percentages of 35% to 41% in 2017, the census said. Nationally, the rental unit percentage average was 36%, while North Dakota averaged 37% and Minnesota 28% in rental units.
From the 1950s to the 1970s, rental units in Fargo ranged between 44% and 48% of all housing.
It's clear rental housing is growing in our area because many people prefer it. The housing market responds to demand. And there are many attractive reasons to rent: No long-term commitments, no yard work, a smaller footprint, sometimes more affordability. And while renting used to be associated with youth, it's clear more older people are choosing to rent for the same reasons younger people do.
But it should also concern a community when fewer and fewer people are putting down longterm roots. After all, an indicator of community health is the citizenry's investment in itself. When a person buys a home, no matter the size or neighborhood, it signals a belief in that community's future.
There are signs that rental unit availability has now outstripped demand. Vacancy rates climbed over 10% last fall and winter in Fargo. Moorhead hit a 10-year-high rental vacancy rate of nearly 11% in March 2018. According to most people who study housing, a 5% vacancy rate is healthy, providing the perfect supply-and-demand ratio to keep rentals affordable while keeping landlords in business.
June's rental vacancy rates dropped to 8.5% in Fargo, 7.7% in Moorhead and 5.2% in West Fargo. If metro population growth continues, the apartments will likely fill up until the rate drops to a healthy level, experts say, adding that apartment building will likely again take off at that point to meet demand.
But could there be a better way for this community to spur more home ownership? Right now there are tax incentives for people to buy new homes, and clearly those homes are being built to meet market demands, too.
But what about incentives for people to buy older homes that make up the core of our communities? Yes, there are incentives to repair and remodel older homes, and those are good. But could we do more to help people who want to own homes and are willing to put in the sweat equity to re-invigorate our core neighborhoods?
We think the answer to those questions is an emphatic yes. The infrastructure of our core communities is largely built. We can do more to repair and re-establish our cities from the inside out. One repaired and rebuilt home leads to more on a block. Pretty soon those refreshed blocks turn into refreshed neighborhoods and before long a refreshed and thriving city of homeowners who have laid down strong roots and are in it for the long haul.
Rental units are a great option for many, but we strongly believe in the American dream of homeownership, and our cities should be working hard to make that a top priority.