MPR: More People, Fewer Homes

More People, Fewer Homes
By Dan Olson
Minnesota Public Radio
May 23, 2001
Part of MPR's online coverage of The Faces of Minnesota

RealAudio

New census numbers confirm that Minnesota's housing shortage is getting worse. The number of Minnesota's housing units increased the past decade, but demand grew faster. Census numbers show vacancy rates for both homeowner and rental occupancy are half what they were 10 years ago.

A FACE OF MINNESOTA
Angela Williams learned a few months ago she'll lose her subsidized housing in November. Williams, 25, a mother of two children who earns $30,000 per year, says she got used to repeated turndowns in her search for housing when landlords learned she was a subsidized renter.
Listen to her comments.
(MPR Photo/Dan Olson)

MINNESOTA'S HOUSING SHORTAGE IS MOST ACUTE IN THE TWIN CITIES. The metro area's rental vacancy rate is between 1.5 percent and 3 percent, and the homeowner-occupied vacancy rate is at 1 percent or less.

"Essentially, 2 percent is no vacancy," says Rick Packer, who works for Arcon, a Twin Cities residential development company. "Those are people turning over at the end of the month. Homeowner rates of 1 percent or below means there is just nothing out there."

Packer's company buys land and sells it in subdivision-sized chunks to companies that build homes. Packer says home builders are clamoring for property to meet the demand for housing.

"We used to put a subdivision in the ground - so to speak - and it used to take 18 months for it to sell out. We now sell it out easily in a morning," says Packer.

The housing shortage is acute nearly everywhere. A few Minnesota counties, according to the census, have double-digit rental vacancy rates. County officials say that's due to the downturn in the farm economy. Elsewhere, in communities like Detroit Lakes, the economy is sound. But Mayor Larry Buboltz says people are leaving because they can't find housing. Buboltz says four years ago city officials used all the tools at their disposal to address the housing crunch, by subsidizing the contruction of single family homes which sold for $85,000.

"These are brand new homes, the basements weren't finished. But over a period of time now - four years to five years later - the price of that home is up to $115,000. There's a lot of families working out here - even if both people are working - they can't afford that home," says Buboltz.

Minnesota's housing supply increased substantially the past 10 years. Census numbers show the state's rental and homeowner-occupied housing numbers grew by about 200,000, to more than two million dwelling units. But the increase doesn't match the demand. And even as new housing is being built, existing housing is being lost. Warren Hanson, president of the Greater Minnesota Housing Corporation, says the loss hits communities across the state.

"Every year we lose about 1,000 units of housing to attrition, storm damage, flood damage, age, so on and so forth. The other problem is that federal contracts for public housing, and a lot of federally-supported public housing, are expiring," he says.

Hanson says property owners who signed a contract with the federal government to supply subsidized housing for low income people are letting the contracts expire. They can make more money by renting their units as market-rate housing. That's why Angela Williams is scheduled to lose her housing this fall.

"Our owner has decided not to renew his contract with HUD, and he gave us notice and we will be moving in November of this year."

Williams earns $30,000 per year, and given the Twin Cities' spiraling housing costs, that income qualifies her for government subsidy. But she and the 45 other families who live in their Shoreview townhouses will have to move, unless they can convince the landlord and the government to strike a deal to keep the townhouses affordable. Williams says she doesn't want to move back home.

"If I don't go with my family, I'd probably go into a shelter somewhere and seek assistance the fast way - because you're homeless and categorized as that - just to get the affordable housing," says Williams.

Foundations led by Blandin and McKnight, and charitable groups such as Habitat for Humanity, along with dozens of companies and neighborhoood groups, have poured tens of millions of dollars over the past decade into building Minnesota housing. However demand continues to exceed supply. Officials say the only solution is for the federal government to restore tax incentives eliminated in the mid-l980s. The incentives, officials say, will attract investors to build the broad spectrum of housing needed to address Minnesota's housing shortage.

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