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Minneapolis is trying to figure out how to give its resident renters a bigger say at City Hall. At least, that’s one of the goals of its new Neighborhoods 2020 plan, a set of recommendations designed to help guide the city as it tweaks the way neighborhood groups operate.
Minneapolis’ neighborhood organizations are 70 nonprofits that host events and give officials input on things like planning. They don’t have any statutory authority, but they do receive money from the city and have a lot of informal power. And with surveys finding the majority of board members to be white and homeowners (the most recent, released in February, found 82 percent were white and 83 percent were homeowners), some say their balance of power is skewed against renters.
Pressure to come up with ways to include more renters in the groups coincides with an underlying shift in the makeup of Minneapolis in recent years: Between 2008 and 2015, the city’s share of renter households grew from 49 percent to 53 percent, making renters the majority of households in Minneapolis, according to data from the American Community Survey.
But that shift has been uneven, meaning any push to make Minneapolis’ neighborhood groups more reflective of the population they represent could mean very different things in different parts of the city.
Losing homes
Minneapolis isn’t the only place that’s seen an increase in renters: In 2017, a larger share of Americans were renters than at any point since at least 1965, according to the Pew Research Center.
Experts say the Great Recession is largely responsible. When the housing bubble burst and the economy entered recession, many homes went into foreclosure as owners were unable to make monthly mortgage payments, and many people who were once homeowners became renters.
Eventually, many homes, sold for bargain prices in a bottomed-out housing market, were bought by investors who turned them into rental properties. Now that the economy has been in recovery for a while, some of these homes are being sold to owners who live in them again, but many remain rentals.
The forces that have shaped the market since the housing crash have affected different Minneapolis neighborhoods in different ways, however. Some north Minneapolis neighborhoods, like Folwell, for example, saw big increases in the share of renter households. Between 2000 and 2015, Folwell went from 23 percent to 53 percent renter-occupied, while the number of households overall declined. Other Minneapolis neighborhoods, like Jordan, which went from 40 percent renter to 53 percent renter, saw an increase in renters without a decline in overall households.
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Richer renters
The increase in the share of renters isn’t only due to people who previously owned homes becoming renters after the housing market crash, though. It’s also being driven by people who might have in the past become homeowners remaining renters for longer — even indefinitely.
Even as the economy began to recover from the recession, young people who might have been able to afford homes in early adulthood in the past can’t necessarily find places that fit their budgets.
That phenomenon is particularly noticeable in the Twin Cities’ starter home market (often defined at homes that cost $250,000 or less), where there is often fierce competition among buyers when the few such houses go on the market.
As a result, many people who in the past would have had money to buy homes now rent instead. In the Twin Cities region, the number of renter households making more than $50,000 per year increased by more than 27,000 between 2000 and 2014, even as the number of renters who make less than $50,000 per year has remained relatively stable.
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The trend is doing a couple things to the housing market: first, it’s creating incentives for landlords to fix up properties to attract higher-income renters and for developers to build apartments attractive to these high-income renters. Second, it’s making it harder for many renters to save up to buy a home, since they are now paying more to rent apartments.
And that’s assuming those renters want to buy a home at all.
The Great Recession changed ideas about homeownership in the U.S., said Dan Hylton, research manager at HousingLink, a Twin Cities nonprofit that connects people to affordable housing. Culturally, “We had really promoted the idea of home ownership as the only type of lifestyle to aspire to up to, until really the housing crisis of [the Great Recession], and at that point, there was a lot of shift in the mindset of people, especially millennials,” he said.
While some people want to own homes but remain renters because they can’t afford it, some who could afford to buy homes are making a deliberate decision to remain renters. That’s especially the case as urban cores are redeveloped with amenities like taprooms and walkable neighborhoods. “I think there’s been some permanent shifts in how cities think about how they develop and how they build,” Hylton said.
As people shift careers and move around more, many of them are also attracted to the flexibility of renting.
Between 2000 and 2015, Loring Park saw a small increase in the share of its homes that were renter occupied — from 81 percent to 83 percent, but saw a sizable increase in its number of renter occupied units.
Demand for housing near downtown is driving a boom in both owner-occupied and rental housing in neighborhoods like the North Loop and Downtown West.
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While the share of renters has decreased in these neighborhoods, the number of renters and homeowners alike has ballooned as these once sparsely-populated districts become popular neighborhoods.
Owner and renter-stable
Other Minneapolis neighborhoods haven’t seen much of a change in their share of renters. In fact, many of Minneapolis neighborhoods for which consistent data are available have barely seen any change in their share of households that are renters at all.
These neighborhoods generally fit into a couple of categories: neighborhoods like Lynnhurst, by the shores of Lake Harriet, which are largely single-family homes that tend to change hands from owner to owner. A small share — 11 percent of units — are renter-occupied.
Or places like Whittier, near downtown, where the majority of residents are renters and have been for a long time.
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How Minneapolis will handle the balance of renters, some of them changing, and some not so much, across its neighborhoods has yet to be decided.
The city is currently collecting feedback on the plan. The guidelines will go to the City Council in April, with specifics slated to be approved by the council in the fall.
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MP.highcharts.makeChart(‘.chart-lynnhurst’, $.extend(true, {}, MP.highcharts.columnOptions, { xAxis: { categories: [‘2000’, ‘2015’] }, yAxis: { title: { text: ‘Housing units’ } }, tooltip: { formatter: function(){ return ‘ ‘ + this.x + ‘‘ + ‘: ‘ + MP.formatters.number(this.y,0) + ‘ ‘ + this.series.name + ‘ units’; } }, series: [{ name: ‘Owner-occupied’, data: [2011, 1913] }, { name: ‘Renter-occupied’, data: [191, 232] } ] }));
MP.highcharts.makeChart(‘.chart-whittier’, $.extend(true, {}, MP.highcharts.columnOptions, { xAxis: { categories: [‘2000’, ‘2015’] }, yAxis: { title: { text: ‘Housing units’ } }, tooltip: { formatter: function(){ return ‘ ‘ + this.x + ‘‘ + ‘: ‘ + MP.formatters.number(this.y,0) + ‘ ‘ + this.series.name + ‘ units’; } }, series: [{ name: ‘Owner-occupied’, data: [781, 847] }, { name: ‘Renter-occupied’, data: [6250, 6234] } ] }));
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Well Greta, thanks for the data and the article. Appears not all neighborhoods are created equal, perhaps a couple more overlays of income per household, number of single head of household, children in household, on assistance of some form, concentration of L3 sex offenders, X-offenders reentering society, etc. etc. etc. As one of those Jordan folks that gets tagged as a bigot, stereotype, biased against rentals etc. etc. that dosen’t know anything about rental vs homeowner it might help arrange the chairs a little. Point being, not all neighborhoods have the rose color glasses, and when you are living in a 53% rental (low income: Supported by census data) you have a very tough challenging time forming and maintaining a broad based stable “community”. Absentee landlords tend not to make nice thoughtful, well intention-ed and caring neighbors.
One of the ‘humps’ – not the only one, but a major obstacle – to ownership is accumulating the necessary cash for the sort of downpayment that mortgage issuers usually like to see. The amount of cash, or even the percentage of the purchase price, is less important than how you get there. I was fortunate – very fortunate – to sell a house in Colorado at a profit, which allowed me to make a substantial downpayment on a condo in metro Denver. That equity allowed me, when grandchildren brought me to Minneapolis, to sell the condo at a loss (the housing bubble had popped by then), and still have a small nest egg to work with when I arrived in the Twin Cities.
The house I bought in far north Minneapolis had been foreclosed, and I was able to take advantage of a deal that probably wasn’t available a year later. The house’s value declined by 25% during my first year or two here, but it has now rebounded. When I check prices of rental units that are approximately the same as the house I now live in, the monthly payments always – always – run $300 to $400 more per month than my mortgage payment, which includes taxes and homeowners insurance.
If I were renting, and paying that $300 to $400 more per month, I might only now – more than 9 years after arrival – be in range of having enough cash on hand for a downpayment on a modest owner-occupied single-family home. It’s not the only factor at work, but it’s a big one, and lenders looking at the percentage of income devoted to housing can’t ignore it. In my case, as a portion of monthly income, that difference is a full 10%, which is often going to be enough to make ownership frustratingly just out of reach of that lower-middle-class family.
Having lived as a renter as well as an owner, I think I have a fair grasp of the advantages and disadvantages of each. Current federal (and state) policy heavily favors owners over renters. I’ve often wondered what would happen to the housing market here and all over the country if mortgage interest was no longer deductible, as is the case, I believe, in Canada. Even under the new tax law, which caps that deduction, eliminating it altogether might bring chaos, but it would also put renters and owners in the same fiscal boat for a change. That has all kinds of interesting possibilities politically…
For a fairly large swath, myself included, it no longer is. With the change in the tax law, many no longer have enough deductions, mortgage interest among them, to itemize beyond the standard rate.
I have had great neighbors who were renters. Maybe the renters aren’t the problem with the community
I question the intent of the City. I think they are hopeful to dismantle the citizen participation system created by the Neighborhood Revitalization Program. This is another attack on neighborhoods which are 90% homeowner. The new renters are mainly downtown and wealthier than many residents. For neighborhoods that are mainly homeowners this plan may be difficult. I have a long history in the City as a neighborhood activist, public official and member of a Board of a nonprofit development company. I authored the NRP to give all neighborhoods a voice in the city not just the inner city. I believe the Mayor and the City Council want to silence this voice with the 2040 plan and this new citizen participation plan.
I welcome the City doing this. The neighborhood groups have been so awful and so backwards-thinking, my perference would have been to defund them altogether. Its just subsidizing NIMBYism.
This was the mayor and council the people of Minneapolis elected. You may think that renters don’t vote and don’t deserve to have their opinions heard, but the election results say otherwise. Homeowners (including me) are also not all narrow-minded as some of the neighborhood groups would have you think.
Those who vote most often: homeowners.
vs.
Those likely to contribute the most to the future campaigns of politicians desiring upward mobility or retention in office.
Then there are the opportunities for future employment by developers
– or foundations funded by those same developers.
I think it’s reasonable for the city to require that the outreach and communications from the neighborhood associations is designed to reach all residents not just the traditional single family homeowners. But punishing those groups if they don’t successfully enlist enough renters to participate on a board is the wrong approach.
What is not discussed is why the relative participation differs. Do renters not know about these opportunities, or are they discouraged from participating, or do they know but it’s not a priority? How long you plan to stay in the neighborhood (be it in rental or an owned home) probably also is a factor. You need to understand the above to decide if a punitive measure pointed at the association is the right approach.
Would they city have the targets localized by association – for example the article says Lynnhurst is 11% rental. According to the website there are 11 members of that association board – so does that mean that there should be 1 member who is not a homeowner, who rents? and it would be ok to be 9% renter on board vs 11% in the neighborhood?
What if there were 3 renters? that 27% would be a proportion far higher than the rental population of 11% for that neighborhood so would they be out of compliance? What if someone who is a renter is on the board moves or quits, does the board lose their funding till the can replace that spot with another renter? What if a renter buys a home in the neighborhood – can they stay on the board if doing so would ruin the targeted representation?
Before the city burdens the neighborhood associations with punitive quota driven performance requirements they should focus on the right type of outreach and engagement so that renters and homeowners alike know how they can get involved – if they want to – with their neighbors.
Perhaps the neighborhood associations not looking upon associating with, and God forbid, welcoming the renters in their midst as an onerous burden might do more to answer your concern than quibbling over quotas. Try being inviting and kind. Seems like a better approach than cloistered paranoia, but hey that’s just this guy’s opinion.
Curious how many folks commenting actually live in high rental areas, type of rental, apartment vs. single family, and relative income? To MH ‘s comment, say you have a neighborhood that is high single head of household living in single family, low income, do you expect same participation and results as dual high ncome condo renters in North loop/Uptown? Point being all rental situations are not created equal.
The effects of a majority population of transients (renters) have been known for some time. LA, Oakland, Chicago, DC, Baltimore…many large cities, put the end game on vivid display.
It’s no mystery. When one has no equity stake in a thing, one has no emotional attachment to it, and so, little or no motivation to care for it.
The one city that stands out is San Francisco. That is because the cost of renting is so high, only the wealthiest can afford it. Wealthier people tend to be less harsh on their environments, owned or not.
Transients = renters?
Wow – look down your nose much?
Did you catch the part of the article that states “Between 2008 and 2015, the city’s share of renter households grew from 49 percent to 53 percent, making renters the majority of households in Minneapolis”. You’re saying the majority of the city is transient?
That doesn’t even make sense.
The times, they are a’changin’, and in this current economy, a lot more people are renting because that’s the only real option they have. Trust me, they are not all the evil great unwashed that you seem to assume them to be.
Curious, who do you think changes address’s more, renters or homeowners?
For single family homes:
Homeowners 13 years (average)
Renters 3 years average)
Is not moving from 1 location to another considered transient?
The math says there will be 4.3 renters vs a single home owner.
Not sure anyone has looked down thier noses, just stating facts. Which one is likely to contribute to equity of the dwelling and by default the neighborhood?
What is the source of your statistics, and the dates that it covers?
Considering how out of reach home ownership is currently for many, many people (once again, a point made in the article is that a majority of Minneapolis households now rent their homes) how likely is it that all those evil old truisms will continue to apply? And remember – renters are taxpayers, too.
(Also, BTW – “transients” has a negative and pejorative connotation. I can’t imagine the choice of that term to describe renters was not intentional.)