Home construction hits high water mark in Twin Cities
Builders started construction on more housing in the Twin Cities metro in 2021 than they did in any of the last 20 years.
Why it matters: The big year is helping us dig out of a shortage of homes that has been driving up rents and housing prices.
- The numbers are even more impressive considering skyrocketing lumber prices and labor shortages that plagued builders last year.
By the numbers: Builders started construction on 21,777 homes in the seven-county metro in 2021, according to preliminary data from the U.S. Department of Housing and Urban Development.
Yes, but: We still are making up for about a decade of underproduction following the 2008 financial crisis, said Libby Starling, director of community development and engagement for the Federal Reserve Bank of Minneapolis.
- "We may have dug out from maybe four years of underproduction with these last few years of higher production," she said. "We still have half a decade of production to catch up on."
The intrigue: In the mid-2000s, 70% of new housing in the metro was single-family homes — think of the farm fields just beyond the suburbs being turned into big houses on cul-de-sacs.
- In 2021, only 38% of new housing was single family. New housing in recent years has been driven by high- and medium-density apartment buildings in urban areas and inner-ring suburbs.
- Starling said the surge in multi-family is a response to an aging population that is looking to downsize into multifamily housing and senior living. And there’s been a trend toward more urban, centrally located living.
The bottom line: Hopefully the new units will eventually drive down housing costs or at least slow the increases.
- However, most of the new production is market rate — new houses starting at $500,000 and one-bedroom apartments renting for at least $1,500.
What to watch: DFL lawmakers have pitched a $1.8 billion plan aimed at speeding up the production of — and preserving existing — affordable housing.
- But it remains unclear if the plan will gain bipartisan support.
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