Back in 2018, Minnesota was facing a 50,000-unit housing shortage, a deficit already fueling rising prices and limiting options for first-time buyers. The State of Minnesota’s Task Force on Housing set the audacious goal of closing the deficit within five years. Getting there would not be easy and would require a restructuring of Minnesota’s housing regulatory framework to focus on supply and affordability to unleash the needed surge in construction needed to close this gap.
To catalog the scope and number of the challenges, Housing Affordability Institute released its debut report examining the state of new construction in Minnesota in early 2019. Priced Out: The True Cost of Minnesota’s Broken Housing Market analyzed new construction costs in the Minneapolis-St. Paul, western Wisconsin, and the greater Chicago areas. This report served as a “stake in the ground” from which progress would be measured and has continued to serve as a reference for policymakers by quantifying, for the first time, the scale of Minnesota’s affordability challenges. Its conclusion showed the stark reality of Minnesota’s housing market: By nearly every measure, it is more expensive to build in Minnesota.
Since then, Minnesota’s housing challenges have grown into a full-blown crisis with demand and supply woefully out of sync. As seen across the globe, lawmakers at all levels of government are examining ways to change direction. But in Minnesota, action on housing has been muted.
And here—seven years later—the housing deficit has doubled and is poised to grow as production has plummeted below prepandemic levels. A deficit that represented two years of housing production now stands closer to five years of permitting. And the picture on the affordability front hasn’t improved. In Minnesota, it remains far more costly to build than in any other state in the upper Midwest.
As highlighted in our recent report, Minnesota’s Homeownership Challenge, the state’s housing market is in a persistent state of high housing costs and undersupply. The result is a self-reinforcing cycle in which the barriers to homeownership only grow. Inaction has created a gravity well, drawing the market deeper into this self-reinforcing decline in production that makes homeownership less attainable.
One of the report’s central conclusions from housing economist Dr. Elliot Eisenberg was “without policy intervention, the shortage is unlikely to resolve on its own.” Minnesota’s current trajectory demonstrates that demand alone cannot overcome structural barriers. Without deliberate action to streamline regulations and incentivize new construction, the state will continue to fall short of meeting housing needs.
Kicking the can down the road isn’t a strategy; it’s a recipe for more of the same.
