Minnesota’s growing housing affordability crisis has been getting a lot of needed attention as of late. Past initiatives, including former Gov. Mark Dayton’s 2018 Task Force on Housing and the Minnesota Homeownership Initiative from the Minnesota REALTORS and Housing First Minnesota has helped to raise awareness of the state’s affordability challenges.
A new report from the Housing Affordability Institute has built upon these efforts and taken the discussion a step further. With the release of a comprehensive study into the cost drivers behind new construction entitled “Priced Out: The True Cost of Minnesota’s Broken Housing Market,” the conversation can begin with a common language and an informed public.
The report highlights specific challenges in the new home marketplace and their impacts on our state’s housing ecosystem. What’s clear from the report is that the key value of home affordability has been shockingly absent from housing policy discussions in the Twin Cities and across the state. The impacts are powerful. The findings are sobering:
- Homeowners will pay $47,000 more for the identical home in Lake Elmo versus Hudson, Wisconsin, only a 15-minute drive apart.
- Homeowners will pay $82,000 more for a home in the Twin Cities versus the same home (actually 100 sq. feet larger) in a growing Southwest Chicago-area suburb.
- Up to one-third of a newly built home’s price comes from various housing policies.
How did we get here?
For decades, well-intentioned policymakers at the local, regional and state level have enacted housing policy without adequately considering their impact on affordability. The compounding effect of these efforts in the Twin Cities has led to the fourth-highest disparity between new and existing home prices of any metropolitan area in the country (a staggering $142,000 between average resale and average newly built).
While the cause of the affordability crisis was unintentional, policymakers at the local, regional and state level must be deliberate in fixing it. We must value affordability along with safety and durability when crafting housing policies.
What can be done?
Bold action is needed across the state. The Legislature needs to elevate and broaden the affordability discussion. By forming a standing Legislative Commission on Housing Affordability, the Legislature can work with local governments, its own agencies, builders and developers and other stakeholders to ensure that homes in our region are affordable.
The housing industry is committed to doing its part, and we look forward to policymakers at all levels joining together to fix our affordability challenge.
David Siegel is the executive director of Housing First Minnesota and the president of the Housing Affordability Institute.
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