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Housing squeeze tight for Minnesota's low-income families

housing availability chart
Minnesota Housing Partnership
Of 12 states in the Upper Midwest, Minnesota ranks the worst for housing affordability for minimum wage workers.

The dramatic decline in home values over the last several years has not resulted in improved access to affordable housing for the people who need it most – extremely low-income families.

That’s the conclusion of a study released recently by the National Low Income Housing Coalition, a Washington, D.C.-based group. It estimates that for the nation as a whole, a household would need to earn $18.25 an hour in order to afford a modest two-bedroom home without spending more than 30 percent of its income on housing costs.

The situation is not much better in Minnesota. A household here would have to earn $15.50 per hour to afford a two-bedroom home without spending more than 30 percent of its income, the group said. By contrast, the typical Minnesota renter earns $12.17 per hour.

For a minimum wage worker earning $7.25 an hour, the picture is worse. He or she would have to work 86 hours a week – or hold 2.1 full-time jobs – to make that rent ($806 a month) without exceeding 30 percent of income. Of 12 states in the Upper Midwest, Minnesota ranks the worst for housing affordability for minimum wage workers, according to the Minnesota Housing Partnership.

The housing meltdown and foreclosure crisis have actually worked to the disadvantage of extremely low income households, according to the national coalition. Families with modest incomes who once were able to own homes have flooded the rental market, reducing vacancy rates and driving up rents.

“It is estimated that the number of renter households rose by nearly 4 million between 2005 and 2010,” the report said. “Over the next decade, the number of renters may increase by upwards of 470,000 annually, further straining the rental market and disproportionately affecting extremely low income households.”

In the Twin Cities, the vacancy rate for the fourth quarter of 2011 stood at 2.8 percent, well below the 5 percent “balanced” level where rental rates generally are stable, according to the Minnesota Housing Partnership.

The group also said the Minneapolis, St. Paul and Duluth school districts reported having 6,000 children who were homeless, an increase of more than 800 from the previous year.

Waiting list

In the Twin Cities, some 2,500 families are on the waiting list for federal public housing vouchers with the Metro HRA, which provides assistance to some 6,800 households in nearly 100 communities. It is the largest of 11 agencies administering the federal Section 8 voucher program in the seven-county metro region.

Leigh Rosenberg, research and outreach manager for the Minnesota Housing Partnership, says Census Bureau data shows about half of Minnesota’s renters are paying more than 30 percent of their income for housing and a quarter of renters  are paying 50 percent or more of their income for housing.

“Lots of people are being forced to pay beyond their means for housing,” Rosenberg said.  “In general, it means that other vital needs are being sacrificed – and that can have really negative consequences.  Even children’s development and nutrition can be compromised.”

The national coalition’s study found rents in the Twin Cities are the most expensive in Minnesota. A worker must earn at least $17.38 an hour to afford a two-bedroom unit without spending more than 30 percent of income for housing costs.

However, counties that are least affordable to renters – given the incomes they earn – are located throughout the state. The five least affordable counties are Wadena, Carlton, Winona, Chisago and Ramsey.

Rosenberg acknowledges that the problem of affordable housing is “enormous in scope” and greatly exceeds any infusion of public resources that might be attainable in the current political and economic climate.

Still, Rosenberg said, the Minnesota Legislature could take a significant step forward this session by approving a $40 million bonding request that would fund efforts to build or rehabilitate affordable housing. The state bonding bill that emerged in the House last week included $15 million for this purpose.

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Comments (6)

Withdrawing equity from the neighborhood.

I do not have any problem with renters because of the fact that they rent, I did it for most of my life and purchased my family home to keep it from going to another LLC. After the tornado it became obvious that, while some landlords are putting money into their properties, many are just taking what they can from them. The neighborhood here northside, simply by looking at it. reveals this asset stripping in the continuing erosion of properties. I do not expect renters to invest in properties they do not own. However, landlords do not invest in their rentals as though they lived in them, hence the short shrift and lack of upkeep. Owners invest in their homes. Property owners maintain their investments. Two different realities, and maintaining is just not really happening across the board. We do not need more LLC's owned by people who do not reside in this neighborhood, or LLC's who rent to gangs and drug dealers who then work a block away from a public school, or LLC's who allow renters to trash the property as they collect federal subsidies or federally paid rent. Ownership of a home was an american ideal until the acquisition of quick and dirty wealth displaced it.

Ownership of a home was

an american ideal until the federal government forced banks to give loans to people who couldn't possibly pay them back, causing the longest housing market collapse and economic recession in history.

Another reason

This is another reason that the bank bailout should have been the homeowner bailout. Yes, homeowners made the mistake of getting loans they couldn't afford (or that they could afford, as long as they kept their jobs), but banks also made a mistake by providing those loans. The difference is, by virtue of being financial businesses, the banks should have ABSOLUTELY known better. There was no excuse for the banks. In the end, if it was homeowners that would have been bailed out, a significant amount of that money would have made its way to the banks that held the mortgages AND more homes would still be in the hands of the homeowners (and rent wouldn't have skyrocketed as much). Any losses on the banks' part would have underlined the necessity of being more responsible with money.

Financial slight-of-hand

Mr. Tester is reciting right wing propaganda again.

NO bank has EVER been forced to give a home loan to someone who “couldn’t possibly pay it back.” The Community Reinvestment Act was designed to encourage banks to invest in their local communities, but participation was and is purely voluntary on the part of the banks involved. More importantly, it is the bank’s JOB to evaluate the creditworthiness of loan applicants. Blaming people who got in over their heads is very much a case of blaming the victim. The vast majority of foreclosed homes and unpaid loans (more than 90% of them) were made to people in the 3 middle income quintiles, with most of those foreclosures taking place in the middle quintile and the one above it.

Most foreclosures have not been on properties “owned” by low-income families, they’ve been on properties “owned” by what most of us would call “ordinary” middle-class families. When the economy went south, thanks to the manipulations on a deregulated Wall Street, and people lost their jobs, the housing market was already in the tank, and the newly-unemployed found themselves with no equity on which to draw to tide them over until the job market recovered. No income, no equity, no mortgage payments.

Ms. Kahler is absolutely on the money (no pun intended). Banks justify their existence, as well as charging interest for loans, by supposedly being experts at assessing risk. The big banks stopped bothering with assessing risk, and went for short-term profit in what several economists have labeled as something like a feeding frenzy of greed. The Bush bailout essentially rescued the people who caused the problem, allowed them to continue to pay bonuses for executive incompetence and fraud at taxpayer expense – Mr. Tester included – and did little or nothing to aid the millions of families caught with a recent job loss and a home loan that was upside-down.

Details are needed to make decisions

"A household here would have to earn $15.50 per hour to afford a two-bedroom home without spending more than 30 percent of its income, the group said. By contrast, the typical Minnesota renter earns $12.17 per hour."

A more detailed breakdown of renters and rents would be helpful. In these two sentences Steve switches from household needing $15.5 for a two bedroom, to one average renter earning $12.17. I have to think that many renters are 27 and younger, living on their own or doubling and tripling up with buddies to afford an apartment. That was my situation straight out of college. Don't we really want to isolate the average income for families/households with children and compare that to the rental expense for a two bedroom? Similarly, taking an average rent is not very helpful as rents vary greatly from location to location; an average does not account for other neighborhood amenities or lack thereof.

If we learned anything from the mortgage melt down, it should be that averaging expansive groups of numbers is terribly precarious and potentially disastrous.

To add to the pressure on low income renters

the ALEC-controlled legislature is passing legislation that will funnel more money to business by ending the renters credit, a cruel and unthinking way to benefit the haves at the expense of those who have little. I hope someone counts up the actual number of jobs created in a couple of years.

Since landlords pass through 100% of their property taxes to their renters as a business expense, this means that renters, including those with very low incomes, will pay the business rate on the portion of the landlord's property that they inhabit.

Maybe the next legislature could consider a revision to the property tax law that would tax renter-occupied properties -- which are the residences of renters -- at the same rate those of us who own our own homes, our residences, pay.