Housing is an essential human requirement. We need adequate shelter for ourselves and our families to survive.
Many of us are blessed with more-than-adequate housing situations. Not only do we cover all basic needs, we have man caves with monster televisions and open-concept kitchens with top-of-the-line appliances.
However, nearly one in four Minnesota households struggles each month to put a roof over their heads. Nearly 550,000 families are “cost-burdened,” meaning their housing costs exceed 30 percent of their income. Families that struggle to pay the rent cut back on necessities, such as food, medicine and transportation.
Many of these families live in sub-standard housing. Some are homeowners, unable to afford regular maintenance and repairs. Others are beholden to landlords to maintain the rental property.
The disparity between the new housing stock cropping up all over the state compared to the needs of lower-income families is obvious. Signs boast “luxury, gated apartment homes” or “single family homes starting in the low $400,000s.” These housing options are completely out-of-reach of thousands of families with incomes near the poverty level. The 2018 federal poverty level is an adjusted gross income of $25,100, for a family of four.
While there is a shortage of rental housing for all income levels, the affordable housing market is squeezed the most. Housing stock is disappearing as large apartment complexes are renovated and turned into upscale units. Duplexes in sought-after suburban or city locations are purchased and razed, and turned into large single-family units.
Incomes have not kept pace with rising housing costs. After adjusting for inflation, median monthly rents rose from $815 in 2000 to $912 in 2016, while median annual incomes fell 4 percent from $38,250 to $36,766, Minnesota Housing, the state’s housing finance agency, reports. The median renter income of $32,600 in 2015 provided $815 to spend affordably on housing compared with the fair-market rent of $924 for a two-bedroom apartment, according to the housing agency.
The number of “naturally occurring” housing units has slowed. Housing stock is not turning over as quickly in older suburbs, which also see some units quickly go from affordable to sub-standard.
Senior citizens throughout Minnesota face similar issues plus factors that are unique to an aging population. A plethora of seniors apartments and complexes are being built throughout the state, many advertising extensive luxury amenities. Seniors on fixed incomes often do not have enough to pay the rents that can start at $1,500 a month and go much higher.
Seniors also struggle with isolation. Lack of mobility complicates daily living. Seniors in outstate areas have very little transit to rely on. While groceries and other products can be delivered, there is a cost. Many seniors, living on the state’s average of $1,457 a person from Social Security, do not have extra dollars to hire ride services or pay higher prices and delivery fees.
Couples and families looking to enter the world of home ownership are also struggling with a mismatch in housing stock and affordability. The average home price now being built in the 13-county metro is $300,000. That is well out of reach of many first-time home buyers, who find it impossible to come up with the desired 20 percent down and the monthly payments. Quality housing in lower price ranges is hard to find and usually sells very quickly.
Builders believe that construction requirements are so strict that the only way to make money is to build higher quality and therefore more expensive houses. Local fees and permits can add $50,000 to $80,000 to the price of a home, according to a February 2018 report from the Shenehon Real Estate Center at the University of St. Thomas.
Four trends are leading to homebuilders finding it difficult to build for less than $350,000: the cost of locally imposed regulations, a mismatch in land prices, the increased cost of building materials and the shortage of labor, the St. Thomas report said. Developers of multi-unit buildings echo those concerns.
Builders and landlords also complain the complexity of meeting federal guidelines for Section 8 and other programs is cumbersome and unworkable.
A variety of government programs subsidize rent and offer tax incentives or grants to developers. While these help many people, the demand far outstrips the number of available units.
The issues surrounding the need for adequate housing spread wide and affect us all. Businesses are struggling to hire workers. “What happens if businesses don’t stay, expand or locate here because the cannot find workers for their jobs?” That question is posed in a report by the Urban Land Institute, which calls the situation a regional economic imperative.
Workers at the lower skill levels often cannot find housing they can afford in locations they need, to be close to the employer or to have access to transportation.
Many efforts are underway to identify solutions to the housing gap, including the Governor’s Task Force on Housing. Many cities are looking at ways to foster affordable housing, by using zoning changes, grants or subsidies. Edina, for example, requires developers to include affordable housing units or to contribute a percentage to a fund dedicated to affordable units. Minneapolis is considering changing zoning rules to allow duplexes and fourplexes on city lots.
“Workforce” units, such as one recently approved in Mounds View, use rent controls and income limits to provide apartments for lower income individuals.
The final question is, how do we address these acute needs in a way that is fair and sustainable? The third editorial in this series will look at some of the possible solutions being proposed that would enhance our state’s future.
All Minnesotans should appreciate the need for affordable housing. The comfort and safety of home is an essential need and is crucial to maintaining thriving communities.
– An opinion of the Adams Publishing – ECM Editorial Board. Reactions welcome. Send to: firstname.lastname@example.org.