The Twin Cities has a housing shortage, but it could be much worse
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Aïda Amer/Axios
Minneapolis' housing deregulation over the past decade has helped keep the Twin Cities from plummeting into the deepest hole when it comes to affordable housing availability.
The big picture: A new report by the National Multifamily Housing Council (NMHC) and New York University highlights Minneapolis as an example of how one city helped keep rents down.
- The report came on the same day that Congress passed the bipartisan federal Road to Housing Act, which aims to do some of the same things Minneapolis did: relax local regulations and encourage construction.
- President Trump said on Wednesday that he won't sign it until Congress passes an election reform bill he wants.
Zoom in: Researchers examined how the Minneapolis 2040 Plan and the elimination of parking minimums helped usher in a boom in multifamily construction, with the city increasing its housing stock by 12% between 2017 and 2022.
- Average rents increased by only 1% over those five years, per the report.
- Meanwhile, the rest of the state increased its housing stock by just 4% and average rents went up 14%.
Between the lines: While there was a national obsession with the 2040 Plan allowing duplexes and triplexes almost anywhere in the city, the NYU/NHMC report correctly notes that 87% of the new units were in buildings with 20-plus apartments.
- The main thrust of the 2040 plan is that it made it much easier for developers to build mid-size buildings along transit corridors.
Yes, but: Researchers note that demand for Minneapolis apartments declined following the civil unrest of the summer of 2020, partially explaining the lack of rent increases.
Reality check: The honeymoon of slow rent growth has already come to an end due to a lack of new construction, plus signs that net out-migration from the Twin Cities has stopped.
- The Twin Cities have the fourth fastest-growing rents in the U.S., according to Yardi Matrix.
The latest: The report says it will take about 60 years for the Twin Cities to address its affordable rental housing shortage if current conditions continue.
- That's not good, but it's better than all but five of the 51 largest metros in the U.S.
- In 20 of the large metros, it will take 200 to 956 years to address the affordable housing gap.
What we're watching: The city is about to begin community engagement to draft its 2050 comprehensive plan as it seeks to satisfy the Metropolitan Council's goal of increasing its population from 430,000 to 514,000 over the next 24 years.
- While Minneapolis' zoning deregulation played a role in the construction boom of 2017-2022, so, too, did low interest rates.
- Jump-starting construction again will likely require those to come down, developers say.