Opponents of zoning modernization have thrown the kitchen sink at reform efforts over the past several years. In states where modest densification has been on the legislative agenda, those seeking to block state-level reforms have cast doubt on the impact of reform on affordability and access and insinuated that property owners, builders, market forces, or the costs of land, labor, and lumber are to blame.
These shiny objects hold no water and serve to distract policymakers from the real issue: local government control of housing has failed to meet the moment, leading to both a supply shortage and barriers to construction.
The Minneapolis Blueprint
Last month, the Pew Research Center released an analysis of the Minneapolis 2040 Comprehensive Plan (the first comprehensive, modest densification proposal enacted in a major U.S. city) and other supply-centric reforms the city has implemented since 2017. Reading the analysis, it is clear to see why the Pew team calls the Minneapolis approach a “blueprint for housing affordability.”
- Minneapolis saw a 14% increase in housing units, while the rest of Minnesota saw only a 4% increase.
- While rent inflation was 14% in the rest of the state, Minneapolis only saw a 1% growth.
- Homelessness in Minneapolis fell 12% while increasing 14% statewide.
The positive impact of the short-lived Minneapolis 2040 Plan and the continued impact of related changes provide a look at why the myths called out by opponents of zoning modernization do not stand up to the evidence.
Housing Reform Myths: Builders and the Three “L”s
Blaming builders for the housing crisis is one of the more pervasive myths of the housing crisis. The flaw in that logic is that property owners and builders don’t control what gets built. Those decisions are made by a combination of government requirements and the preferences of those paying for the project.
Builders can only build to the specifications allowed by local and state regulators. An example is that if a homeowner wants to build a 1,000-square-foot home with a one-car garage and an ADU in the backyard, it would only be possible when the city has little to no parking mandates and a square-footage minimum that allows a 1,000-square-foot home.
As for the three Ls – lumber, land, and labor, Minneapolis illustrates how these are less of a factor than first realized. Diving deeper into the Minneapolis and Minnesota comparisons requires an understanding that the North Star State has a uniform statewide building code, so the base construction costs are the same in Minneapolis as they are in much of the state^.
This is where the “lumber” deflection fails, as the cost of building materials does not vary between Minneapolis and an adjacent community in a statistically relevant way. The same building would cost about the same amount (excluding mandates on aesthetics) in any city in the metro area. “Lumber”, even when using an expansive term of building materials cannot explain away why adding new housing is good for everyone.
“Labor” also fails to explain away why reform is needed. Builders in the Twin Cities are all pulling from the same labor pool, leaving labor costs consistent from project to project.
“Land” is where things get interesting. By opening the door to more consumer choices in housing, Minneapolis knocked off one of the major land-related roadblocks: few housing options. Land is unique in that it is a roadblock from both an affordability and logistical perspective. The lifting of parking mandates can help on the affordability and access side of the ledger, by increasing density and reducing the costs of unnecessary parking spaces.
What is missing in the alteration-filled litany of distractions is the fourth L: Laws. Limitations on housing choices and mandates on size, parking, and aesthetic finishes have a far greater impact on housing than the other Ls. As Minneapolis showed, modifying these mandates has a positive and demonstrable impact on affordability, access, and homelessness.
Path Forward Requires Lifting Roadblocks
All of this is to say our nation’s housing crisis is not caused by property owners, builders, land, labor, lumber, or any other shiny object. These distractions are used to deflect attention from lifting specific roadblocks that comprise the status quo of zoning and housing approval structures.
As Minneapolis has proven, lifting these roadblocks is necessary to address both supply and affordability challenges.
America simply does not have enough housing, causing existing home prices and monthly rents to spike. Adding needed housing, particularly at lower price points in high-growth areas, is simply too difficult, if not impossible. Individually, either of these is bad, but the combination of the two has led America, and many other nations, to face a two-pronged crisis.
Solving this dual-pronged issue will require knocking down the roadblocks that have led to these issues. And the Pew team is right, Minneapolis has shown us the path. Unfortunately, no one city can solve a state’s housing crisis. It will take everyone pulling together to lift affordability roadblocks and add supply to rebalance our housing ecosystem.
Nick Erickson is the executive director Housing Affordability Institute.
^ Author’s Note: Minnesota falls into two climate zones for the Energy Code. Most of the new housing development in Minnesota falls into Climate Zone 6, including the Minneapolis-St. Paul area. Northern Minnesota falls into Climate Zone 7. These two zones have a slight difference in energy code-related provisions.