Legislative Preview: Housing Emerges as Top Tier Issue

When the legislature gavels in to begin a new legislative biennium, many issues are on the docket waiting to be addressed. Housing affordability is poised to be one of the key issues.

As the price of housing, from rentals to single-family homeownership, continues to increase across Minnesota, more families are impacted by the increasing burden of housing affordability and our region’s competitiveness is at risk.

In a stark reminder of the housing market challenges, home affordability in the Twin Cities metro area hit another decade-low in October 2018, according to the Minneapolis Area Association of Realtors’ (MAAR) latest survey released in November 2018. A combination of rising interest rates, rising construction costs, slow wage growth and low inventory has exacerbated the issue.

“While the market hasn’t quite transformed, the dynamics are shifting and the market is transitioning,” said David Arbit, director of research and economics at MAAR. “Today’s buyers still face plenty of competition over limited supply.”

A central challenge in the low inventory of existing homes, is the long-term under-supply of newly built homes. Homebuilders in our region report that they are unable to meet demand primarily because of cost barriers attributable to regulation and a labor force that has failed to replenish a healthy supply of construction trade professionals.

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The Governor’s Task Force on Housing released its findings last August, presenting a clarity to the overall housing market challenge, along with a host of recommended strategies.

“Gov. Mark Dayton’s housing task force was clear. We need to build more homes. 300,000 by 2030,” said David Siegel, Housing First Minnesota executive director. “In order to meet this demand we must discuss and take action on issues including housing cost transparency, land use availability, regulatory relief and the workforce shortage.”

The challenge of addressing housing by state lawmakers will be met by a new legislative landscape following the 2018 elections. Atop state government will be Gov.-elect Tim Walz. He will be joined by the legislature, the only split body in the country. The Minnesota House flipped majority control to the DFL, while the Senate majority remains with Republicans. Roughly 30 percent of the Minnesota House is made up of newly elected legislators, who will work with a new administration under Gov.-elect Walz and his new cabinet of agency leaders.

Over the last few years, proposals have been initiated to increase transparency and oversight for regulatory costs impacting housing, dedicate funding for housing finance assistance and to promote careers in construction. It’s expected that these issues will be refreshed for the 2019 session, along with other proposals.

“The new legislature and Gov.-elect Walz are fortunate to face housing challenges where there is broad, bipartisan agreement in the identification of our affordability challenges” said James Vagle, Housing First Minnesota’s director of advocacy. “The steeper challenge facing them will be to find consensus around housing initiatives that get to the root causes of our region’s broken housing eco-system”.

The legislature convenes on Jan. 8 and has until May 20 to finish its work.