Oct 25, 2022 - News

More apartments fuel Twin Cities housing growth

Illustration of the state of MN, with scaffolding.

Illustration: Allie Carl/Axios

Growth in Twin Cities housing has undergone a significant shift toward more urban and high density living.

The big picture: Developers added 22,327 housing units in 2021, the most in a year since 1987, according to a new annual housing report by the Met Council that analyzed municipal permits from across the metro.

  • Of those units, 61% were in multifamily buildings. Ten years ago, only 34% of new housing was multifamily.

What's happening: There's been an ongoing boom in apartment construction in the two big cities and that's spread into the suburbs in recent years.

  • Meanwhile, the building of single-family houses on the fringes of the metro has flattened out.

Why it matters: That increase in urban housing is helping solve a big shortage.

Yes, but: Only about 10% of new housing is "affordable" and, looking closer, developers are not delivering nearly enough "deeply affordable" housing, according to the Met Council report.

  • "Our housing system is producing the least households in the area of most need for affordability assistance," Met Council senior housing planner Hilary Lovelace told its community development committee.
  • To get more deeply affordable housing, Lovelace said the Met Council could prioritize its grants for those types of projects, preserve existing low-rent housing and continue to push cities to adopt inclusionary zoning policies that require new projects to include such units.

What's ahead: The Twin Cities need to sustain this level of housing production to dig out from a shortage caused by the recession following the 2008 housing crisis, write researchers at the Minneapolis Fed.

  • St. Paul's new rent control policy has slowed development; Minneapolis' 2040 plan to add density is being challenged and developers complain of big fees in the suburbs.
  • "Even the good construction-related news comes with the knowledge that increasing interest rates and local policies that discourage new construction pose stiff headwinds to the ultimate solution to affordability concerns: growing our housing supply," they wrote.

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