A new era for housing policy

A new era for housing policy

As we move through the second quarter of 2019, it’s becoming clear that a new era in housing policy is upon us. Nationally, major institutions like Freddie Mac, HUD and the Brookings Institute are leading a conversation that highlights affordability, restrictive zoning and housing supply as mainstream policy priorities for all levels of government to address. States like California are battling the housing crises with legal actions forcing local governments to adjust their rules. Furthermore, California’s legislature is debating a major legislative initiative that would upend elements of local zoning control.

Here in Minnesota, the Legislature took a major step forward with the creation of the Legislative Commission on Housing Affordability. Additionally, the Minnesota Senate created the Select Committee on Homeownership Affordability and Availability.

This constellation of movements in the housing policy space is more than a consensus that a problem exists; it’s the clearest indication yet that our state is entering a new era in housing policy.

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Answering the call for action

Answering the call for action

As the cost of a new home increases, two cities take proactive approaches

With the cost of housing increasing at a rate much faster than wages, two cities in Minnesota are working to reduce what new-home buyers pay.

Why? Growth is good for Minnesota cities. New homes bring new residents which, in turn, create jobs and expand the tax base of cities.

According to a 2015 study from the National Association of Home Builders, for every 100 new homes built there is a one-year economic impact of $28.7 million in economic activity, $3.6 million in local government revenue and 395 jobs created.

In the following years, the sustained effect of these 100 homes is $1 million in added local government revenue, 69 jobs and $4.1 million in added economic activity.

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A new day for housing affordability

A new day for housing affordability

Gov. Walz signs Legislative Commission on Housing Affordability, Senate Establishes Select Committee on Homeownership Affordability and Availability

The Minnesota Legislature punctuated the 2019 legislative session by creating two forums focused on housing affordability and homeownership access. Gov. Walz signed the bill creating the Legislative Commission on Housing Affordability, which was joined by the Minnesota Senate’s creation of the Select Committee on Homeownership Affordability and Availability. Both entities will seat their respective members and begin work this summer.

The creation of these bodies comes at a time when the region’s housing ecosystem is experiencing a myriad of structural challenges. The chronic lack of supply of available homes for sale, dearth of affordable options and overall inability for the housing industry to construct affordably priced homes, highlight the many roadblocks impacting the market.

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Majority of Minnesotans Facing a Shortage of Affordable Home Options

Majority of Minnesotans Facing a Shortage of Affordable Home Options

Results of a recently conducted statewide survey show that a majority of Minnesotans are facing a shortage of affordable home options.

“Minnesotans at all levels of the housing ecosystem are facing an affordability challenge,” said David Siegel, executive director of Housing First Minnesota. “As we enter the final weeks of the legislative session, we are hopeful that the legislature and Governor Walz will show they are serious about addressing this problem.”

A majority of Minnesotans also stated that the best way to make Minnesota’s housing market more affordable is by reducing fees and costly regulations.

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Consensus on the Affordability Crisis

Consensus on the Affordability Crisis

2019 is off to a steady start for the first few months of home construction activity. Given our adventures with the weather, steady may be acceptable for now, though we know we need to be building more homes. This isn’t just the homebuilder wanting to build more homes, a growing consensus of public and private institutions have come to this same conclusion: our housing market is broken and we need a surge in new, affordably priced homes.

The Housing Affordability Institute provided a remarkable look at one of the reasons our housing market is suffering, our homes are simply too expensive for many Minnesotans. In Priced Out: The True Cost of Minnesota’s Broken Housing Market, we get to see what impacts the cost of new homes and the challenges this presents for many Minnesota families.

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Legislature Weighs Housing Affordability

Legislature Weighs Housing Affordability

With growing pressure to address the burgeoning housing affordability crisis, the legislature is considering several initiatives, ranging from housing subsidies to the creation of a commission on housing affordability.

Leading the housing policy discussion, HF 1208 (Carlson, A., DFL-Bloomington)/SF 1294 (Draheim, R-Madison Lake) would create a legislative commission to review regulatory costs, housing innovations and homeownership access issues across the housing spectrum.

Modeled after existing legislative commissions covering complex policy issues like pensions and data privacy, the measure would seat eight legislators, two from each caucus, to review and make housing policy recommendations.

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Homeowners Priced Out

Homeowners Priced Out

New Report from the Housing Affordability Institute Reveals Why The Housing Market Fails Too Many Minnesota Families

A new report titled Priced Out: The True Cost of Minnesota’s Broken Housing Market provides a detailed look at the growing regulatory pressures on new homes, which is having a powerful effect on the entire housing ecosystem of our state. The research demonstrates that up to one-third of the price of a new Twin Cities home is due to local, regional and state housing policies.

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Let's Fix It

Let's Fix It

As we transition into the new year, the opportunities and challenges facing the housing industry are remarkable. On the plus side, our economy is strong, employment is steady and demand for housing remains on the upswing. Those positive housing market attributes are balanced with challenges, including a 10-year low in housing affordability, steep regulatory costs placed on new homes and a workforce that is not replenishing at a healthy rate.

The Governor’s Task Force on Housing provided key conclusions in its final report, which was released last August. Key recommendations include building 300,000 homes by 2030, driven primarily by the private market; establishing formal review of regulatory cost drivers; and prioritization of housing as a key building block by policy makers.

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Legislative Preview: Housing Emerges as Top Tier Issue

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.

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2018 Housing Report Card: Good, But Needs Improvement

2018 Housing Report Card: Good, But Needs Improvement

Housing Affordability Issue Continues to Grow

According to the 2018 single-family permit numbers, Minnesota homebuilders had their second-best year in a decade. But, those numbers seem more disappointing coming off 2017, which was the best year for new housing construction since the Great Recession.

Minnesota single-family permits were down 3 percent year-to-date through October, but according to the Minneapolis Area Association of REALTORS (MAAR), new construction pending sales through October were up 7.8 percent.

While some indicators point to the existing housing market shifting from a seller’s to a buyer’s market, the inventory of homes for sale is still at record lows. Therefore, prices continue to rise, homes are selling in less time and sellers are yielding a higher share of their list price.

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Governor’s Task Force Report: More New Housing Needed

The Governor’s Task Force on Housing Affordability released its report titled “More Places to Call Home: Investing in Minnesota’s Future” on Aug. 21. Leading the recommendations included in the report is a call to build 300,000 new homes by 2030, create a regulatory review panel and address the industry- wide labor crisis.

“The Governor’s Task Force on Housing took an important first step in identifying the shortage of new housing production, our need to evaluate regulations, and the construction labor shortage which threatens our ability to solve our housing affordability crisis,” said David Siegel, executive director of Housing First Minnesota. “We are especially pleased with the emphasis to support and strengthen homeownership. “Throughout the Task Force process, Housing First Minnesota advocated for solving our housing supply challenges by increasing affordability across the housing market.

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“We are pleased to see the Task Force embrace the core of this approach, which begins with evaluating regulations and land policies to directly address affordability. “The hard work of addressing the cost drivers impacting housing affordability now enters a new phase. As the leading voice for homebuilding and remodeling, Housing First Minnesota is pleased to see other stakeholders ready to join us in addressing this critical challenge facing all Minnesotans.”

Housing First Minnesota staff attended meetings of the task force and homeownership work group during the first half of the year and sent a letter to the task force in June, saying that addressing Minnesota’s low housing inventory is critical to solving the housing affordability crisis.

New Construction Stormwater Permit Now in Effect

New Construction Stormwater Permit Now in Effect

The Minnesota Pollution Control Agency (MPCA) released the fnal 2018 Construction Stormwater Permit on July 25. The 2018 Permit, which went into effect on Aug. 1, includes changes requested by Housing First Minnesota.

In May, Housing First Minnesota sent a letter to the MPCA seeking changes to five items, including several provisions that would have expanded enforcement actions under the new Permit, with MPCA making each of the requested changes.

One difference between the earlier draft and the final permit, however, concerns industry experts. In April 2017, Housing First Minnesota requested the repair timeframe be increased, a change that was included in the draft version of the permit released in April 2018. Instead of increasing the repair time frame to “BMPs prior to the next anticipated rain event or within three (3) calendar days whichever comes first” as planned, the MPCA reverted to the existing language of “by the end of the next business day after discovery” in the final 2018 Permit.

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