Housing Experts Agree, We Need Policy Reform to Create More Homes
Headline after headline, we see greater concerns about the availability and affordability of housing in Minnesota. In fact, the U.S. Census has shown that the Twin Cities has the worst housing shortage in the nation!
Looking to learn more about these issues, the Legislative Commission on Housing Affordability recently invited a slate of speakers to their October meeting to share data and possible solutions.
Testifiers from the Minneapolis Association of Realtors ®, Zillow, the Minneapolis Federal Reserve and Zonda all gave presentations on the current state-of-affairs for the Minnesota housing market. Throughout the conversation the need for zoning and permitting reform was mentioned as one of the top tier solutions to supply woes.
David Arbit, economist for the Minneapolis Realtors ® highlighted how the lack of supply is causing double-digit price growth across the metro for two straight years, calling the inventory shortage a game of musical chairs. Arbit said that some homebuyers would otherwise be willing to sell, but they want to have a place to sit when the music stops.
David Arbit, economist for the Minneapolis Realtors ® shares a chart showing the massive decline of active listings in the Twin Cities for under $250,000.
Additionally, the supply crunch is having the greatest impact on lower income households and households of color. Luke Bell, Midwest Government Affairs for Zillow, mentioned that the Minneapolis-St. Paul metro has a 50 point black-white homeownership gap, 16 points larger than the next widest gap.
Zillow Research shows that the Minneapolis-St. Paul region has the largest homeownership gap in the nation.
Libby Starling with the Minneapolis Federal Reserve highlighted the need for a wholistic approach in order to bring more desperately needed inventory to the market. Starling’s solutions included changes to zoning, modular housing, reviewing the state building code, changes to property taxes, expediting permitting and approvals, and reducing fees.
A chart shared by Libby Starling of the Minneapolis Federal Reserve shows the inadequate building of new housing in the Twin Cities.
Finally, Danielle Leach with Zonda focused on new home construction and the substantial cost increases over the past decade. She discussed the lack of developed lots as well as the local mandates that add to the costs of a home such as luxury exterior mandates like stone exteriors and architectural designs.
Zonda specializes in new home construction data. This chart shows over the past year more and more new construction is being built at the higher price points.
The Legislative Commission on Housing Affordability will meet monthly throughout the interim in hopes of providing the full legislature new housing solutions for the upcoming 2022 Legislative Session.