Bloomberg writer Justin Fox recently posted an opinion piece on what has happened to housing in Minneapolis since December 2018, when the city council, through its Minneapolis 2040 plan, voted to allow duplexes or triplexes or reconfigure and expand existing houses to add one or two dwelling units by right on the roughly 70% of the city’s land where only detached single-family houses had been allowed. His analysis concluded that, at most 97 new units have been allowed because of this change. To place this in context, the city permitted 2,317 new housing units in the first half of 2022 alone. Almost all of the new housing in Minneapolis has been in structures of 5 or more units. Minneapolis was building at a similar pace before Minneapolis 2040 began to take effect — and the highest-profile element of the plan, the end of single-family zoning, is responsible for only about 1% of the new units permitted since January 2020.
Rental market tight, will be getting tighter
The Urban Institute recently sponsored its second annual Data, Demographics and Demand symposium. The subject was the future of multifamily housing. More than half the new households formed in the next six years will be renters rather than homeowners, yet renter incomes are on average only 70 percent of homeowner incomes. Five experts in rental housing offered their observations, summarized in the most recent MetroTrends blogpost (put out by the Urban Institute). It is a very interesting read, especially for me, living in a college town that is experiencing a boom in multifamily construction. Three quick points:
- Rental supply is tight and getting tighter. Just to keep up with normal rental demand, including the yearly loss of about 100,000 units, the country needs 400,000 new rental units a year.
- Much of the rental housing currently under construction will be affordable only to the top 4 to 5 percent of renters. Other renters will need to rely on an already-constrained supply of existing housing, much of which will be single-family rentals.
- With high rents, stagnant incomes, and constrained supply, one panelist said “it would not shock” him if the 25 percent of renters who pay more than 50 percent of their income for rent and utilities goes up to 35 percent in a few years time.
The post also suggested the roles local, state and national government can play to help solve these challenges. I urge you to read the original MetroTrends post.
SGA blogpost focuses on foreclosures
Smart Growth America has linked to a number of opinion articles concerning the nation’s housing and foreclosure crisis in today’s (January 10) blogpost. They provide a variety of perspectives, from the Wall Street Journal’s stance against further intervention by the Federal Reserve to the Center for American Progress’s call to “get serious about the housing market.”
Prediction: Worst is yet to come for housing market
An interesting article predicting a “coming housing calamity” appeared on the New Urban News newsletter. Arthur Nelson, a well-respected planning professor at the University of Utah, predicts that the sales of single-family homes by aging baby boomers, rising household sizes, dropping homeownership and tighter lending standards will result in a “disaster for homebuilders.”