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How government can keep housing affordable for everyone: stop making housing more expensive and stop trying to help

I have noted with growing alarm over the last several years as Minnesota winds up to put state and local government in charge of providing, or enabling, so-called “affordable housing” and to address a “housing shortage.”

There are various task forces around the state, and during Governor Dayton’s final months in office his Task Force on Housing released 30 recommendations last week. Yes, the task force has all the usual suspects and support for the idea of government intervention from the Editorial Board at the Strib.

Do you remember when President Reagan used to say the scariest sentence in the English language was, “I am from the government, and I am here to help you?”

Well, for a good scare, read what the task force says about why it exists:

Why is a Task Force on Housing needed in 2018?

Inequitable and unfair access to safe, quality, stable housing is a person-centered problem, and we need people from a broad range of communities with diverse perspectives and a wide range of expertise to create solutions. We know that what has worked in the past is important but insufficient to meet the demands, needs and challenges of our changing communities. The goal of the Governor’s Task Force on Housing is to support what is working, gain a broader understanding of what success looks like for people across the state, identify gaps in the system, and develop innovative solutions to ensure that families, individuals, and communities have the foundation for success that they need.

Note how Governor Dayton’s folks lead with “inequitable and unfair.” Sigh.

I am not sure whether there is a shortage of housing; if you are poor finding an apartment or house can sometimes be a challenge. And I know that towns with employers who ramp up have had issues especially if the pay is low (like meat processing or other Big Ag). Employers would love to shift (or share) the cost of workforce housing to taxpayers; that has already happened in Minnesota.

I am sure of one thing: there is no “crisis” in our state. Government regulations and interventions into what is overall a very healthy private marketplace, will drive up the cost of housing for everyone.

Think of what government intervention on behalf of the poor has done to health care costs for every American. And what Obamacare has done to our state and local budgets.  These well-meaning folks want to do for housing what they have done for health care. Can I hear a “No, thank you!”

So before our legislature or local governments try anything new, or tap more taxpayers dollars, to address what they have proclaimed a shortage or a crisis, they should first analyze how state and local regulations drive the costs of building and maintaining rental and other housing, especially for people who are cost sensitive: students, young people just getting a start and for low-income residents, including the elderly who are in fixed incomes. (Minnesotans who are stuck in welfare dependency are a different matter because of federal programs.)

Here is what the task force says it wants to address—do you think government can take this on?

Housing challenges Minnesota faces:

  • INCOMES NOT KEEPING UP:Median incomes have not kept up with the rising cost of housing.
    • The number of cost-burdened households (those paying more than 30% of income for housing costs) has increased 58% from 2000 to 2016.
    • Renters’ costs have increased 11% since 2000 while real wages have fallen by 4%.
    • 554,000 Minnesotans are cost-burdened across the state.
  • LOW VACANCY RATES:Vacancy rates in the Twin Cities metro are hovering at about 3 percent, whereas a balanced rental market usually has a 5 percent vacancy rate.
  • HOUSING SHORTAGES:Similar housing shortages exist in most regional job growth centers throughout Minnesota, with Rochester’s workforce housing vacancy rate at just 1.2% as Destination Medical Center (DMC) economic growth takes off. 
  • POOR HOUSING QUALITY:Poor housing quality in the privately-owned housing units negatively impacts family health, education and employment outcomes and this housing shortage makes it impossible for many working families to secure decent apartments they can afford, creating economic stress and instability at work and school.
  • DISPARITIES IN RATES OF HOMEOWNERSHIP:While Minnesota remains a high homeownership state, we are among the five states with the largest disparities in home ownership among households of color.
  • EVICTIONS:8,400 families are evicted annually in Hennepin and Ramsey counties alone, mostly due to non- payment of rent, interrupting the family’s stability and relegating them to a future with limited housing choices, often competing for the poorest quality housing units in the market.
  • LOSS OF AFFORDABLE UNITS:Most low income households live in what is called “naturally occurring affordable housing,” or “NOAH” – which is housing that is affordable but not government subsidized. We are losing thousands of these housing units each year to speculators charging higher rents and often displacing low income families. Much of this loss is occurring in suburban communities where the buildings are being sold with modest improvements and increased rents, forcing the low- to moderate- wage earning households out of their housing. While our affordable housing system is one of the most effective in the country, it produced 1,429 rental units statewide in 2016. This falls short of the thousands of naturally occurring affordable housing units currently being lost each year.

The good news is my colleague Isaac Orr has agreed to take on this policy area for the Center; watch for his take on the Task Force recommendations, and better ideas on how Minnesota can keep our housing market healthy and affordable for all Minnesotans.

 

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