Out of House and Home: Solving the Twin Cities’ Affordable Housing Problem

Nearly everyone acknowledges that the lack of housing available for people of low and middle income in the Twin Cities (Minneapolis-St. Paul) is a significant problem. Regardless of political ideology, there is a broad recognition that the availability of “affordable” housing, however, defined, is seriously lagging demand. It is one of the most serious problems facing the Twin Cities today.

The shortage of affordable housing is not unique to the Twin Cities; it’s a problem throughout the United States. Unfortunately, the Twin Cities metro area is worse off than most metro areas around the country and is far worse than any other metro area in the Midwest.

Among the 100 largest metro areas in the United States, the Twin Cities is the 16th largest and is tied for the 20th highest housing costs, but if we remove coastal areas from the list, Minneapolis-St. Paul (MSP) has the 6th highest housing costs in the country.

If we look at the Midwest, MSP has the highest costs—by far. In the 10 largest metro areas in the Midwest, MSP does not just have the most expensive housing, it is 37% higher than the next highest metro area (Chicago), and MSP’s costs are more than double both Indianapolis and Cleveland.

Overall, MSP’s housing costs are 56% higher than the other largest metro areas in the Midwest.

There are multiple reasons for MSP’s high housing costs, but the ones that set us apart from everywhere else in the Midwest are all caused by the actions of government.

The Metropolitan Council, for example, has inflated the cost of land in MSP through its creation and enforcement of the MUSA line, an “urban containment boundary” around the entire seven-county Twin Cities metro area. Predictably, this artificial growth barrier significantly increases the cost of land within the boundary. In fact, the cost of land in MSP is 84% higher than the average of the 10 largest Midwest metro areas.

In addition, cities can add tens of thousands of dollars to the cost of new housing through fees and requirements, and new “inclusionary zoning” mandates that some cities are passing are making the problem even worse.

Finally, Minnesota’s building codes and regulations are far more stringent and costly than most other states.

Politicians can promise massive spending programs to address the affordable housing problem in the Twin Cities, but no amount of spending will solve (or even lessen) this problem unless government is willing to do what it hasn’t in the past: reform and significantly roll back government mandates, regulations and fees and rein in the Met Council.

Jeff Johnson is an adjunct policy fellow at Center of the American Experiment.