Minnesota Supreme Court passes on Winona rental restriction case

The decision leaves in place Winona’s rule limiting rentals per block.

Article by Pam Louwagie 

After hearing the case of three Winona property owners fighting the city’s cap on rental houses, the Minnesota Supreme Court decided not to decide.

In a ruling issued Wednesday, the high court found that the case was moot because each homeowner had already resolved their fight, either by selling their house, letting it go back to the bank or gaining a rental license. The order left the city’s law in place.

The homeowners were challenging the city’s 2005 ordinance limiting the number of rental properties to 30 percent per block in some neighborhoods. The rule was meant to ease parking problems and protect the neighborhoods from decline, but property owners who were denied long-term rental licenses sued, arguing the rule infringed on their property rights.

The case was being watched around the state to see whether governments could limit house rentals in specific areas to preserve neighborhood livability. Both the district court and state court of appeals ruled in favor of the city.

Mankato, Northfield and West St. Paul had similar caps in varying percentages.

The court acknowledged that other municipalities have similar regulations, but said they did not operate in an identical fashion and would require independent consideration. “This case does not present an urgent question of statewide significance,” the court found.

George Hoff, an attorney for the city, said the ruling importantly leaves in place the appeals court’s analysis of city power to tackle livability issues. The cap was “the product of a long process that included several studies,” he said.

Plaintiffs, represented by lawyers from the Institute for Justice, a national libertarian nonprofit with an office in Minnesota, argued that the law treats homeowners unfairly. They appealed on grounds of constitutional due process, equal protection and other arguments.

This article was written by Pam Louwagie for StarTribune.com . It can be read here in its entirety under its original title, “Supreme Court passes on Winona rental restriction case”.

According to the Wall Street Journal there are 5 reasons why home prices are rising.  It is not just here in the Twin Cities that we have seen a turn around in the housing market, but rather across the United States.  What are the main causes of this turn around in the housing market?

• Good housing affordability – because home prices have fallen so low and mortgage rates are also at record lows a house payment is much more affordable to people. The average monthly house payment in the US last month was $720 – at the end of 2005 it was $1270.
• Increase in household formation – it is estimated that the US will add about 1 million new households this year – the average over the past 5 years is about 570,000. Add this to the pent up demand that is coming back to the market and we are looking at close to 1.2 million new households this year looking for homes.
• Rents are increasing – rental properties are hard to find and rents are increasing rapidly so it makes sense to buy a home if you can swing the down payment and qualify for a mortgage.
• The number of distressed properties is on the decline – distressed properties drove down the price of homes in traditional sale situations, so with these properties on the decline, traditional sellers can ask for more money for their homes.
• Very low home inventory – new home inventory is at a low point equal to about 50 years ago, existing homes are at a 10 year low point.  With the decrease in inventory and increase in buying pool, sellers are finding themselves in multiple offer situations which drive up prices.

The Twin Cities Multi Family Market is thriving right now!  According to Marcus & Millichap Real Estate Investment Services, it ranks as one of the strongest in the country!

Part of the reason for this is the tremendous amount of new jobs being created in the Twin Cities.  Alone in 2012 there are expected to be another 28,000 new jobs, several with Fortune 500 companies in the area.  Target is doing some of the biggest amounts of hiring!

Builders are expected to finish about 1,870 new apartments in 2012, in 2011 they finished just 477.  Even with the new apartments, the vacancy rate is forecast to hold steady at around 2.9% and rents are expected to rise around 3%.

The percentage of home ownership is at its lowest point in the last 20 years resulting in the strongest rental market in the past 20 years!   About 71 percent of Minnesotans owned their home last year, the lowest annual rate since 1993 when the rate stood at 68.9 percent, according to census numbers. Home ownership fell again during the first quarter of 2012 to about 70 percent. During the height of the housing bubble, the home ownership rate in Minnesota was one of the highest in the nation, hitting 79 percent in early 2005. (more…)