Latest Posts

Home

Facebook

Twitter

Search
About

Why Can’t Young People Afford Houses?

Today’s Minneapolis Star Tribune bemoans the lack of affordable housing for young people in the Twin Cities: “Twin Cities real estate pinchpoint: Few low-priced homes are being built.”

Builders are putting up more houses than they have in a decade, but not the kind in most demand.

About 16 percent of the new houses in the Twin Cities metro this fall were priced less than $250,000, says a new report by Metrostudy, a national housing research firm. The rest were out of reach for the first-time buyers who are expected to drive the housing market in the coming year. A decade ago, 40 percent of new homes in the Twin Cities sold for less than $250,000.

Odd: there is plenty of demand, but not much supply. How can that be? The Strib’s Jim Buchta offers some tentative explanations:

Builders and developers blame high land and labor costs and municipal fees on [sic] their inability to build less-expensive houses, but savvy builders are getting creative. They are rolling out more multi­level floor plans that take up less land, and because there’s a clear correlation between the cost of the land and the price of a house, developers are on the hunt for developable land that’s one or two steps beyond the areas that are more popular right now.

Buchta describes a development in Waconia (!) that may be attractive to first-time home buyers. But it seems that today’s article misses the main story, apart from that passing reference to “municipal fees”. Which is odd, since it was the same Jim Buchta who wrote the story that we commented on here:

It turns out that the Twin Cities is the 16th-most undersupplied housing market in the nation. And a number of government actors bear responsibility for that. The Star Tribune reports that municipal fees for builders here

…are among the highest in the nation, making it difficult to build the less expensive houses that have tight profit margins. Such fees can account for 25 to 30 percent of the cost of the average new house….

That doesn’t include the additional cost of complying with the state’s building and energy codes, which are among the most stringent in the nation.

Since builders can’t afford to build the entry-level houses that middle-class buyers want (priced from $200,000 to $350,000), they are catering to well-heeled folks, “leaving a vast swath of would-be buyers with few options.”

So it is our state and municipal governments that make it way too expensive to build affordable housing, with fees accounting for “25 to 30 percent of the cost of the average new house”–consider that for a moment, it is stunning–and elaborate building and energy codes (fight global warming!) piled on top of that.

I can’t come up with a better conclusion than the one Kathy Kersten wrote in the linked post in September:

Government policies in the Twin Cities are hurting a key element of the population we need most to strengthen our state’s economy—young, hard-working families trying to get their feet on, and climb, the ladder of success. Will enterprising young people want to stay here when they could find the affordable, single-family housing they want in fast-growing metro areas like Atlanta and Houston?

Increasingly, the answer to that question is No.

Comments

Subscribe

Categories

Upcoming Events

  • YLC Curling Event

    Location: Chaska Curling Center 3210 Chaska Blvd, Chaska, MN 55318

    Grab your broom and stone and join the Young Leadership Council for an evening of Curling at the Chaska Curling Center! $40 registration includes: Instruction Ice time and equipment Appetizers (Curling Center Bar will be available to purchase drinks) The event will begin with 15-20 minutes of classroom instruction on curling rules and basics followed by 20-30 minutes on the ice for practice and drills. Instructors will be on hand the whole evening to guide your games. Dress Code: Bring a pair of clean-on-the-bottom shoes to change into. No leather soles or metal lace hooks Loose fitting or strechy clothes…

    Register Now
  • The Diversity Delusion

    Location: Hilton Minneapolis 1001 South Marquette Avenue Minneapolis, MN 55403

    Please join Center of the American Experiment on Wednesday, April 24th at the Hilton Hotel for a lunch forum with Heather Mac Donald as she discusses her new book, The Diversity Delusion: How Race and Gender Pandering Corrupt the University and Undermine Our Culture.  Heather Mac Donald is the Thomas W. Smith Fellow at the Manhattan Institute, a contributing editor of City Journal, and a New York Times bestselling author. She is a recipient of the 2005 Bradley Prize. Mac Donald’s work at City Journal has covered a range of topics, including higher education, immigration, policing, homelessness and homeless advocacy, criminal-justice reform, and race…

    Register Now
  • 2019 Annual Dinner Featuring Nigel Farage

    Location: Hilton Minneapolis 1001 South Marquette Avenue Minneapolis, MN 55403

    Purchase Tickets Here

    Register Now