Twin Cities area needs new strategy on affordable housing

Housing has become a fighting matter in Minneapolis this summer. It's routinely called a crisis in St. Paul. The latest numbers emanating from the regional planning shop at the Metropolitan Council help explain why, and bear notice.

The most recent MetroStats report describes this region's population and housing trends between 2010 and 2017. Those are years in which much of the large millennial generation (born between 1981 and 1996) reached adulthood and, in many cases, sought housing in central cities.

As a result, the region's growth leaders of the previous decade — Shakopee, Woodbury and Lakeville — have been supplanted since 2010 by Minneapolis, St. Paul and, bucking the urban trend, Blaine. Minneapolis and St. Paul account for nearly 30 percent of this decade's regional population growth and a lot of local angst about how best to house more people.

But the two big cities are not alone in their dilemma. The Twin Cities area has added nearly 250,000 new residents in this decade; 51 cities in the seven-county region have gained more than 1,000 since 2010. That's a slower pace than witnessed in cities like Denver, Seattle and Portland, and slower than the Twin Cities experienced in the last quarter of the 20th century. Yet it's considerably faster than the growth in the region's housing supply.

The number of households is up 7.4 percent, compared with 5.4 percent growth in the supply of housing units. As a result, the region's housing rental vacancy rate last year hit a record low in the modern era, 4 percent. Since 2014, average monthly rents have been climbing at a rate that exceeds inflation, in effect tacking a $155-a-month "housing shortage" surcharge on today's average apartment rent. In a comparison group of a dozen U.S. cities, only Atlanta and San Francisco — the latter notorious for high housing costs — have experienced a bigger gap between household and housing growth rates since 2010.

Those numbers say that the Twin Cities area needs more housing, and soon. Without it, housing costs will continue the rapid climb of the last four years, MetroStats predicts. That will deprive this region of an advantage it now enjoys over other U.S. cities in the competition for talent that's due to intensify in the 2020s. Among its dozen peer cities between 2012 and 2016, the Twin Cities area ranked second lowest only to Pittsburgh for the share of its population that pays more than 30 percent of its income for housing.

"The Twin Cities still has the critical opportunity to address housing supply issues while keeping affordability within reach, an uphill and ongoing struggle in other metro areas," the MetroStats report says.

It then adds an important caveat to its plea for more housing: "More units alone will not ease the region's growing housing affordability crisis … . Increasing production will only take the region so far."

The reason: Too little of the housing growth that has occurred in this decade has served low- and middle-income households. In 2006, the Metropolitan Council calculated that the region would need 52,000 more affordable-housing units by 2020 to meet demand. As of 2016, it had seen just 7,000 new units in that price range. The housing development incentives and regulations — the carrots and sticks — that have been in play in the Twin Cities for the past decade have not been producing the result the region's livability requires.

"The region is woefully behind," the report said. It called for those who develop housing — and those who regulate it — to press harder to employ "intentional strategies to prioritize equitable development."

Fortunately, a panel of housing experts and stakeholders has been laboring for the past year to analyze and recommend just such strategies to state and local governments. The Governor's Task Force on Housing — the first effort of its kind in Minnesota in 30 years — is due to release its final report on Tuesday. Judging from the Metropolitan Council's numbers, its recommendations are coming not a moment too soon.