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Think $745 a month for a one-bedroom sounds like a good deal? Not if you live in Minnesota’s Polk County

Twin Cities residents aren’t the only Minnesotans having trouble paying rent these days.

Renters in Polk County are feeling the effects of an affordable housing crunch.

For rent: a modest one-bedroom apartment in a Crookston apartment complex, $530. A basic two bedroom in an East Grand Forks fourplex: $780, plus utilities.

To Twin Cities residents, that might not sound like a lot. Rising rents, the result of high demand and low vacancy, are causing a well-publicized affordable housing crunch in the state’s biggest urban area. But residents of the state’s biggest urban area aren’t the only Minnesotans having trouble paying rent these days.

Renters in Polk County, and in the Grand Forks metro area it includes, are feeling the effects of an affordable housing crunch, too, according to a new report from the Minnesota Housing Partnership.

According to the report, a widening gap between the cost of rent and wages makes paying for housing more difficult for renters in this northwestern Minnesota county than in other Greater Minnesota communities.

A widening gap

Polk County is big — about the size of Hennepin, Anoka, Dakota and Washington counties combined — and it’s mostly rural. Most of the county is farmland and small towns, apart from East Grand Forks, just across the Red River from Grand Forks, a North Dakota city with a population double Polk County's, and Crookston, Polk county’s seat.

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Housing costs set Polk County apart from other Minnesota counties that fit similar descriptions.

The gap between what the county’s roughly 3,600 renter households make and what their housing costs is bigger in the Grand Forks area than in any other Greater Minnesota metro area, according to the Minnesota Housing Partnership report: in the Grand Forks metro area, which includes all of Polk County, the average renter has to work 87 hours in a month — more than two weeks at 40 hours a week — just to cover the cost of renting a one-bedroom apartment at the fair-market rate of $745.

(A note about the data: in calculating the number of hours the average renter has to work to afford fair market rent, MHP uses the mean hourly renter income. That could skew the figure in metros that have a small number of very high income renters.)

Hours worked by the average renter to pay monthly one-bedroom rent by metro area
Source: Minnesota Housing Partnership

That’s compared to 82 hours the average renter would have to work in the Fargo area; 79 hours in the LaCrosse area; 64 hours in Mankato and Duluth; 55 hours in St. Cloud and 45 hours in Rochester.

Lower wages

Renters in Polk County have among the lowest wages of any renters in the state.

The average renter in Polk County makes $8.53 an hour (before taxes). That falls in the lower range for counties in Minnesota: In Hennepin County, the average renter makes $19.19 an hour. In Cook County the average is $6.94 an hour — the lowest in Minnesota, according to the Minnesota Housing Partnership.

It’s not for lack of jobs that people are having trouble keeping up, said Karen Lukasz, the housing coordinator for the Northwest Minnesota Multi-County Housing Authority. Unemployment in Polk County is at a low 3.2 percent.

“There’s plenty of jobs available, but they’re not necessarily more than minimum wage,” she said.

Many of Polk residents work in Grand Forks. In North Dakota, the minimum wage is equal to the federal minimum, at $7.25 an hour, compared to Minnesota’s $7.87 an hour for small employers and $9.65 an hour for large employers. Plus, many low-wage jobs are in the service industry, where people working for tips make a base wage of $4.86 an hour, compared to minimum wage in Minnesota.

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The median renter income in Polk County, when you account for inflation, declined by 7 percent between 2000 and 2015, according to the Minnesota Housing Partnership.

“People need two, three, four jobs,” to make ends meet, Lukasz said.

Higher rents

As pay has stagnated, rents have increased: by 15 percent from 2000 to 2015, per the Minnesota Housing Partnership.

Fair market rate rent, a number calculated by the U.S. Department of Housing and Urban Development to define a fairly priced apartment, is higher in Polk County than in any other non-Twin Cities metropolitan statistical area county at $745 a month for a one-bedroom.

“It’s really high-cost to live up here,” Lukasz said.

Part of that is likely due to demand, said Skip Duchesneau, of D.W. Jones Management, a property management company that operates in northwestern Minnesota. Polk County has seen high demand for housing with the expansion of DigiKey Electronics in neighboring Pennington County.

Digikey has so many employees living in Crookston and East Grand Forks, in Polk County, that it’s running a bus service to ferry them back and forth, about 45 minutes from Crookston and an hour from East Grand Forks.

That’s brought in more workers and put pressure on the housing market in the region, Duchesneau said. And it’s likely to bring more in the future: DigiKey plans to add 100 new jobs a year to the area for the next decade.

“That’s a lot of pressure for that area of the state, with these smaller communities. People drive from Grand Forks, they drive from Crookston,” Duchesneau said.

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There hasn’t been a ton of new construction to alleviate rental market pressure.

Across the river in Grand Forks, a lot of the new apartment construction has been on the high end, said Lukasz, while East Grand Forks has seen little multifamily development.

For builders, you have to charge enough rent to be able to cover the cost of building, but people have to be able to afford it, too, Duchesneau said. And that’s hard to do, especially when, oftentimes in Greater Minnesota, you’re building on lots that also require infrastructure – roads, electricity and sewage — built out to them.

New construction often appraises for less than it cost to build, and in rural communities, which can drive up rents, said Paul Gorte, the economic development director for East Grand Forks.

Polk County isn’t alone in these challenges: across much of the state, wages have stagnated while housing costs have risen.

“One of the problems we see in Greater Minnesota is we don’t see that much production. We’re not building enough, especially multifamily, to keep up with demand,” said Carolyn Szczepanski, the director of research and communications at the Minnesota Housing Partnership.

Whereas in the Twin Cities, people worry about national investors coming in and building, in Greater Minnesota, “In rural areas, it’s almost the opposite, how do we market our town to get an investor, to get a developer to come in,” she said.