VOL. 5 ISSUE 6, DEC. 2021
THE MINNESOTA HOUSING INDUSTRY NEWS SOURCE BY HOUSING FIRST MINNESOTA • HOUSINGINDUSTRYNEWS.ORG
Legislative Commission on Housing Affordability examines Minnesota's severe shortage of housing that is driving housing costs beyond the reach of many Minnesotans.
Housing Commission digs further into housing supply and affordability crisis The Legislative Commission on Housing Affordability convened in October and November to continue its work identifying housing supply and affordability issues that are concurrently bearing down on Minnesota, negatively impacting homeownership access. The commission, co-chaired by Sen. Kari Dziedzic (DFL-Minneapolis) and Rep. Jim Nash (R-Waconia), has been deeply engaged this fall as the impacts of the housing challenge have continued to compound. The October hearing featured a host of expert testifiers who shared their perspectives on the state of housing in Minnesota. The themes were consistent throughout: Minnesota has a severe shortage of housing that is driving housing costs beyond the reach of many Minnesotans. “I’ve got about 7,700 active listings in the 16-county Twin Cities region. I used to have 36,500 listings only 14 years ago. This represents a nearly 80% decline in housing supply from 2007. . . . We’ve only had population growth since then,” said David
Arbit, director of research and economics for the Minneapolis Area Association of Realtors®. The stunning lack of housing was a constant theme, as was the direct correlation to surging home values and prices. “When we look at home values in the Minneapolis-St. Paul metro area in September 2021, the average home value in the metro area was $349,000. This is up $43,000 on a year-over-year basis compared to where it was in September 2020 at $306,000,” stated Luke Bell, Zillow’s Midwest senior manager of government affairs and public affairs. “Since January 2000, when we started producing these estimates, this is the highest observed level of home values in the Minneapolis-St. Paul region,” Bell continued. The housing inventory challenge has been a long time coming, going back well over a decade. The cumulative impact of years of underbuilding has exacerbated challenges, according to experts.
“Since 2004, so looking at the past 16 years, there’s been a massive collapse in the number of building permits offered, bottoming out in 2009 and then increasing through a recent peak of 2019. But when we look at this overall, the number of new housing units is not keeping up with what is necessary to keep up with population growth or household formation,” stated Libby Starling, director of community development and engagement for the Minneapolis Federal Reserve. The interconnected challenge of extreme lack of housing inventory and upward pressure on home prices impacts the entirety of the housing market, but it is most glaring in the housing equity measure. While housing equity disparities between white and non-white homeowners are a national issue, Minneapolis-St. Paul ranks at the bottom when compared to the other major metropolitan regions in the United States. “Unfortunately, the lack of supply and
INSIDE THIS ISSUE
Plumbing Code effective in December PAGE 4
Q & A: Housing reform in the 2022 session PAGE 6
Builder of the Year named at the 2021 BIG Night PAGE 22
CONTINUED >> PAGE 7
Minnesota homebuilders have busiest year since 2005 even with strong headwinds Despite the numerous challenges to building homes in the current market conditions, Minnesota homebuilders are set to have the busiest year since the housing crash. According to the Keystone Report from January to November of 2021, Twin Cities homebuilders pulled permits for 6,757 new single-family homes.
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HOUSING INDUSTRY NEWS
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