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by | Aug 23, 2018 | Economy, Infrastructure, Jobs & Wages

Minnesota has a reputation as a great place to call home. In national rankings of quality of life, job quality, child wellbeing, and cost of living we look pretty attractive.

Among the competitive advantages of Minnesota is that historically we have been an affordable place to find a home. However, across the state communities that have long had pent up demand for housing are continuing to feel the squeeze, while areas that just a few years ago were staying ahead of the need are beginning to fall behind.

Advocates, businesses, and policy makers all know that our communities need people who need affordable housing – childcare workers, people to work in our factories and food processing facilities, construction workers, and home health care aides – but the idea of meeting this need can start to feel abstract and insurmountable.

So, what do we mean when we say that we need more affordable homes in Minnesota? Where do we even begin?

According to the newly released report from the Governor’s Task Force on Housing, Minnesota needs to produce about 300,000 new homes by 2030 to meet both pent up demand and projected future growth. While this need exists across all geographies, incomes, and types of housing, the gaps are most pressing for the lowest wage workers, seniors on fixed incomes, and other low wealth families.

It is useful to think about creating homes not solely as building stuff, but also as creating improved access to existing housing. In that sense we are not necessarily talking about a shortage of buildings, we are talking about a shortage and/or mismatch of opportunities regardless of the number or type of structures that exist in any given community. Not only does this give us flexibility in thinking about solutions to meet the need, it also takes into account that not every home that is nominally affordable at a particular rent level or purchase price is available to a family that needs a place to live that is affordable to them. For example, if someone who makes $40,000 a year is living in an apartment that is theoretically affordable for someone making $25,000 a year, that apartment is not available to the lower wage worker. If you look at affordable homes statewide, this becomes even more complicated since markets vary by affordability and income. One community may have lower typical housing costs but also lower typical wages, while another may have higher housing costs and a wide range of wages. Geography is also a key consideration: if you have a job in Willmar it is irrelevant to your family that there might be an affordable apartment in Worthington some 120 miles away.1

Let’s use an an example one of the fastest growing occupations in the state: personal and home care aides. Currently there are over 72,000 people employed in this sector and the need for workers is expected to grow over 33% by 2026.2 The median income for someone working full time in this sector is just under $25,000 a year.3 The United States Department of Housing and Urban Development estimates that a family will struggle to make ends meet if they pay more than 30% of their income toward housing costs. By this definition, the family of our hypothetical personal and home care aide can afford a monthly rent of about $622 including utilities. If they cannot find a home that costs less than $622 they would be considered “housing cost burdened.”

Is it any surprise that of the 176,300 renter households in Minnesota who fall into roughly the same income range as our home care worker, over 75% are paying rents that are not affordable?4 Right now there is a shortage of 112,840 rental homes that are both affordable and available to people at this income level.5

If population growth continues at the forcast rate, there will be an additional 168,209 people living in Minnesota in five years and by 2026 we will see population gains of 256,250.6 This is good news for the economy since we need more people coming to Minnesota to live and work for our communities to thrive and our businesses to grow. If more jobs in Minnesota are family supporting jobs with family supporting wages, this will help decrease the need for homes affordable at the lowest levels. If not, the shortage of affordable homes for families like those of our personal and home care aide will continue to grow.

Meeting this need is a smart investment in our communities. When communities have sufficient affordable places to call home, it is easier to attract and retain workers. Our seniors, our children, and our communities need the people who need affordable homes.

1Regions use the definition from the State of Minnesota Department of Employment and Economic Development Planning Areas 
2Minnesota Department of Employment and Economic Development, Occupational and Employment Statistics, 2018, First Quarter; Employment Data from 2017, Second Quarter
4United States Department of Housing and Urban Development, 2010-2014 CHAS data
5Minnesota Housing, 2017 Updated Gaps Analysis
6Minnesota State Demographic Center, Minnesota’s total population age and sex projections from 2017-2070

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