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Minnesota’s housing crisis is government made

2018 will see the release of the triennial Minnesota Statewide Homeless Survey. Last conducted in 2015, its key finding, according to the Department of Employment and Economic Development, was that 30 percent of adults and 42 percent of youth were working at the time of the survey.

There are many reasons for homelessness. Unemployment is certainly one, as are substance abuse and mental health problems. But these people are working. They are holding down jobs. They would, in most cases, be capable of renting or owning a home. So why can’t they?

Housing costs in the Twin Cities

Perhaps the main reason is cost. As the Pioneer Press put it in April,

Outside coastal states like New York and California, the Twin Cities was No. 1 in housing costs among the nation’s 20 largest metro areas, according to 2014 U.S. Census data. And they have remained at or near the top of other cost-comparison surveys since then. Statewide, Twin Citians pay an average of 26 percent more than neighboring states. That price gap explodes when compared with southern states like Texas.

Photo from Pioneer Press

Source: Pioneer Press

Regulations, centralization, and fees

So why is housing so expensive in the Twin Cities?

The Pioneer Press surveyed 60 government officials, builders, Realtors, housing and energy lobbyists, and home buyers. They found that

…regulations, including energy-saving rules and safety codes, are tougher and costlier than in surrounding states;

 

The cost of metro-area land is elevated by centralized planning, larger mandated lot sizes and a public resistance to development;

 

An increasing use of city fees, tucked into the price of a new house, can add tens of thousands of dollars.

Government is hurting, not helping the working poor

One of the main arguments used by supporters of the $15 per hour minimum wage campaign was that earnings were not keeping up with housing costs. But the reason isn’t falling wages. It is government mandated regulations, centralization, and fees. The government’s response to the problem it has created is job killing acts like hiking the minimum wage. This will only hurt these people further. Instead, why doesn’t the government actually do something useful and repeal the regulations and fees it burdens them with?

Shame on them

There are those who defend these housing high costs. “The reason we have codes is to protect buildings, protect public health and not unduly waste energy,” according to Michael Noble, executive director of Fresh Energy, an energy conservation nonprofit. And it is the working homeless of the Twin Cities who pay for the dreams of people like this. Utopias have usually demanded unwilling sacrifices from others, Mr Noble’s is no different.

The housing crisis in the Twin Cities is not an outcome of free markets. It is the result of government action. These results might not be intended, but they are foreseeable. Politicians who allow this situation to continue by maintaining onerous regulations, centralized planning, and high fees, ought to be ashamed of themselves.

John Phelan is an economist at the Center of the American Experiment.

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