“In 2020, we were looking at a vacancy rate of about 5%. This year, we’re looking at 2.1%,” said Theresa Bajda, a planner with the city that wrote the report.

In turn, the cost of living has gone up. The average rent for rental units across the city rose by roughly $220 last year. The average cost of homes in the city also rose by 17%.

Bajda attributes the issues to pandemic-related issues, like people returning to the workforce and eviction moratoriums coming to an end. She said the problem could also have to do with the local workforce. “Duluth is really expensive to build in. And we’re also seeing, it’s difficult and we don’t have the labor force that the Twin Cities have,” said Bajda.

She believes the problem is pricing out some of Duluth’s more vulnerable residents.

“The demand for units across all affordability levels is just so high that it’s difficult for people to obtain housing,” she said.

 Jill Keppers, Executive Director of the Duluth Housing Redevelopment Authority says the issue is contributing to homelessness in the area and needs to be solved. “It puts our most low income and most vulnerable people at risk of homelessness. We’ve seen a rise in our homelessness population, and we see a greater need for supportive housing units,” Keppers said.

Bajda said the only way to solve the problem is to increase availability.

“We need to meet the demand that we need for housing, both with new construction and redevelopment,” she said.

Last year, the City of Duluth set aside $19.2 million of COVID relief money to invest in affordable housing. They hope to create more options for residents to ensure a less competitive market.