Minnesota Housing has released its Key 2025 Housing Issues and Trends Chart Book, a PDF that is accessible HERE. The report is promoted by the state as a “chart book that highlights and documents key housing issues and trends in Minnesota.” The 64-page report is sliced into four chapters that focus on 1) lack of affordable housing; 2) impact on communities; 3) risk of losing existing stock of affordable housing; and 4) need for a more sustainable and resilient housing stock due to climate change.
There is a housing crisis in Minnesota and we all know that the privilege of owning a home is becoming more out of reach for many people. Renting, which used to be a solid option to owning for many people, is also becoming highly unsustainable.
While the report focuses more on the rental market it does note some interesting stats that are reflected in the HOA industry. Some key stats noted in the report:
642,000 households in Minnesota are cost burdened by spending 30% or more of their income on housing.
The cost of a modest 1,600 sq. ft. starter home ($400,000) is about $100,000 more than a typical homebuyer can afford ($300,000). In June 2024, only 4% of newly constructed homes in Minnesota were selling for less than $300K.
Until recently, historically low interest rates made homeownership more affordable. Rates on 30-year mortgages have consistently been near 7% for several years.
Because of higher interest rates, the cost of buying a median-priced home increased by $700 per month.
Residential development costs rose rapidly in 2021 and 2022, making new housing much more expensive.
Insurance costs for rental properties and property insurance have been rapidly increasing over the last six years.
The report cuts off data at 2023, so it’s guaranteed that the data would look even more unfavorable if tracked to present day variables given the even higher trajectory of inflation and rising insurance costs the past 18 months.
Other conclusions the report made:
Minnesota has a severe shortage of housing that is affordable. There are several key drivers of the affordable housing shortage: During and following the Great Recession, Minnesota underproduced housing, which created an overall shortage and has driven up rents and home prices across the market. When housing is being built, only a small share of it is affordable. Since 2019, for the lowest-income renter households, incomes have not kept pace with rents. While current homeowners greatly benefited by refinancing their mortgages to lower interest rates between 2011 to 2021, homeownership has become out of reach for many people with the rise in interest rates after 2021 and sustained high home prices. Other factors are contributing to the shortage, including the cost of new construction, cost of property insurance, pricing of low-income housing tax credits, and others.
The report finds that people with disabilities are profoundly affected by the housing crisis:
While the lack of affordable housing is pervasive, some communities have been impacted more than others. Lower-income households are more likely to face housing instability. Homelessness, which is the most severe form of housing instability, is a persistent problem with more and more people sleeping outside. Indigenous, Black and people of color experience large disparities across the housing continuum, from homelessness to homeownership. While lower-income households have few, if any, housing choices, lower-income people with disabilities have even fewer, which leads to isolation and segregation. The growing number of people who are age 75 and older is creating housing needs and challenges.
Some other conclusions from the report:
Minnesota is at risk of losing its existing stock of affordable housing. With climate change, the housing stock needs to become far more sustainable and resilient.
Minnesota has a large stock of affordable housing that needs rehabilitation and preservation, which is at risk of being lost due to deterioration or rehabilitation with rent/home-price increases.
Residential greenhouse gas emissions are rising in Minnesota. Housing insurance costs are rising with an increasing number of catastrophic climate and weather events.
Again, it’s a long report but worth perusing.
In case you missed the link above, the whole report is available in PDF form: https://www.mnhousing.gov/content/published/api/v1.1/assets/CONTDC11CBD026C74145BBB28DB553E3BE2E/native?cb=_cache_9386&channelToken=294436b7dd6c4570988cae88f0ee7c90&download=false
–Mark Luis Foster
