Housing Affordability Institute recently presented on workforce housing gaps at the regional Workforce Housing Summit hosted by St. Cloud State University. The event was organized by St. Cloud State University’s School of Public Affairs, United Way Central Minnesota, Central Minnesota Builders Association, CentraCare, St. Cloud Area Chamber of Commerce, and Initiative Foundation.

Nick Erickson, executive director of Housing Affordability Institute, opened the summit by providing a look at housing affordability in the St. Cloud region and how the lack of housing is increasing housing prices for the region’s workforce.

Workforce Housing Is Missing Middle Housing

Before the terms “affordable housing” or “workforce housing” were used commonly used, this was known simply as “housing.” Today, workforce housing is viewed as a part of “missing middle housing.” Developing strategies to tackle the missing middle housing gaps in St. Cloud, or any other area, requires a look at the entire housing ecosystem.

Increasing the supply of all housing, especially at affordable price points, will address the region’s supply issues. The reduction of housing costs, Erickson said, will have to be part of the conversation for the community.

Workforce Housing Gaps in St. Cloud

St. Cloud, like many communities, is dealing with housing costs rising at a rate that far exceeds wage growth. According to the Minnesota Department of Employment and Economic Development’s presentation at the conference, the area’s workforce is also impacted by inflation, which has increased economic strain on the region’s workforce.

Since February 2019, the median existing-home price in Central Minnesota has risen 50%, according to data from Minnesota Realtors. At this same time, months’ supply of housing has fallen.

This decrease in housing supply, paired with the increase in interest rates is having a noticeable impact on affordability in the St. Cloud region. In February 2019, a household in St. Cloud earning $56,000 a year could afford the median-priced home and not be cost-burdened. Today, it would require a household income of $86,000 to afford the median-priced home in the region and not be cost-burdened, an increase of 53 percent in only two years.

Like much of Minnesota, when looking at median income and median housing prices, residents in St. Cloud are more likely to be cost-burdened than peer Midwest markets. The chart below highlights four Midwest MSAs of approximately 200,000 residents.

St. Cloud’s median household income, according to the 2021 American Community Survey, places it in the middle of the pack for similar-sized MSAs.

Regional Coordination Sought

While the erosion of housing affordability isn’t unique to St Cloud, what sets this community apart from others is that a broad base of community leaders gathered to not only discuss the issue, but also seek to form a plan of action.

As the event concluded, Dave Borgert, emcee of the event, called for a regional approach to the missing middle housing problem, explaining with five cities across three counties, no one government entity can alone tackle the issue. Along with coordination and collaboration, “courage” would be needed Borgertt said.

Erickson noted to the Summit’s attendees that for a regional approach to be successful, it should seek to succussed where the Twin Cities region has failed. Decades ago, the Metropolitan Council created a “fair share” program to ensure access to affordable housing was equally dispersed across the Twin Cities region. Over time, due to a variety of factors, this “fair share” became viewed as a minimum-maximum performance target, and affordable housing was concentrated predominantly in Minneapolis and St. Paul.