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Preparing for Investments Along the University Corridor
Renting vs. owning a home is an issue covered extensively in the materials on this page because of the wealth generation that comes from owning a home over a long period of time by building up equity. Numerous scholars have documented ways that communities of color are often unable to build significant wealth in their families either because they cannot afford to purchase a home and build equity, or they buy a home using a subprime loan that comes with overly high interest rates, or the home they own is in a neighborhood of concentrated poverty where housing prices remain suppressed even as housing prices rise elsewhere in the same city or metropolitan area.
Another concern relating to renting a home or apartment is the effect of the local economy on rents. If significant investments are made along University Avenue in the form of a new light rail line and commercial development along the Avenue, there is a potential for renters to be forced out if and when landlords follow the market and raise the rents. Homeowners, on the other hand, have steady mortgage costs that are not affected by local investments, resulting in greater home equity in the long run if University Corridor housing prices rise due to the investments made. The 2000 Census data shows that three-fourths of the people of color in the University Corridor are renters.
In light of these pressures on renters, IRP decided to create the following maps, all of which can be viewed or downloaded at the bottom of this page.
Percentage of Renter Households: Rates of homeownership and renting vary across the University Corridor, but some patterns do emerge. Urban planning literature suggests that the most stable neighborhoods are ones which offer a variety of housing types, including apartments, small houses and large houses, as well as a mix of rental and home ownership opportunities. The University Corridor is a strong blend of these elements. The variety in size of housing implies a range of housing prices as well, which results in a mix of incomes and a diverse population. The Corridor has few areas that are all or nearly all owner-occupied, though the neighborhood between Snelling and Lexington avenues, north of University Ave., and the neighborhood south of Summit Avenue do show low availability of rental units. The rest of the Corridor provides a mix of housing, though there are relatively more Census tracts with 50 percent or more of rental units in the area north of University and east of Lexington than anywhere else in the Corridor.
There are pockets of very high rates of renting close to the University of Minnesota in Dinkytown, the University of St. Thomas on the western edge of St. Paul, and just south of the University of Minnesota—St. Paul campus. Students are known to be renters and result in concentrated populations of renters that are unlike the average residential population because they often have financial support from parents. Even if students spend a significant portion of their income on housing while in college, it is anticipated that college students will go on to graduate and generate earnings that will result in a comfortable ratio of income to housing costs. (Please see the “Percentage of Renter Households” map for reference.)
Homeowner/Renter Rates by Race: Sometimes the numbers reveal a pattern that can’t be shown in maps. IRP’s chart, “Homeowner/Renter Rate by Race,” shows that just over half of all white residents of the University Corridor are homeowners, and just under half of all white residents are renters. But for all of the different communities of color living in the same area, the rates are quite different. Across the board, just about one-quarter of all residents of color are homeowners, while three-quarters of all residents of color are renters. (Please see the “Homeowner/Renter Rate by Race” chart for reference.)
Renter Households by Race: IRP has created further maps showing where renters of different races reside. The maps include Asian, Black, Hispanic and white renters. It is important to note that these maps are created using raw numbers of people living in each Census block, rather than percentages. The reason for this is because the percentages would in some cases be so small as to not be distinguishable from the majority population. Many of the Census blocks that indicate a high number of persons of one race or ethnicity living there contain high rises or other high-density apartments or senior housing. (Please see the four “Asian, Hispanic, Black and White Renters by Race” maps for reference.)
Renter Burdens: The Census uses a standard measure to assess whether people have excessive housing cost burdens: they compare incomes to housing costs and average it for Census block groups. IRP generated two maps using this information: “Percentage of Renters Paying more than 30% of Income on Rent,” and “Percentage of Renters Paying more than 50% of Income on Rent.” Paying more than 30% of income on rent indicates a burden that can make it difficult for households to continue to pay the rent if a householder loses a job, or has an accident or other medical calamity. Renters paying over 50% of their income on rent are especially vulnerable to losing their apartment or rented house if unexpected costs arise, since there is relatively little unencumbered income to cover other expenses.
The 30% and more renter burden map shows a number of things; first, it shows that the student renter areas show up in abundance in this category, which is to be expected. Second, it shows that many of the Census block groups with between 50 and 75% of the renters paying more than 30% of their income on rent live in the Frogtown and Thomas-Dale neighborhoods east of Lexington Avenue.
The 50% and more renter burden map draws attention to the student populations, which are not believed to be at risk of displacement due to rent burden. But higher-than-average figures again predominate throughout Frogtown and Thomas-Dale. (Please see the “Percentage of Renters Paying more than 30% of Income on Rent” and “Percentage of Renters Paying more than 50% of Income on Rent” maps for reference).
Percentage of Renter Household Income Spent on Housing: When broken out by race, there is little difference in terms of likelihood of spending more than 30% or 50% of income on rent. For instance, almost 40% of all white renters throughout the University Corridor spent over 30% of their income on rent, while 42.5% of Black renters did the same. About 46% of Asian renters spent over 30% of their income on rent. Looking at who is spending 50% or more of their income spent on rent, about 18 percent of white renters, 20.5 percent of Black renters, and 23 percent of Asian renters did so. (Please see the “Renter Household Income Spent on Housing” chart for reference).
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