Between the millennial and ‘Z’ generations aging into their prime homebuying years, the demand for homes is off the charts. So where is all the inventory?
Looking to answer this question and more, the Legislative Commission on Housing Affordability heard from a slate of speakers Tuesday afternoon to sift through the data and asked for possible solutions. Testifiers from the Minneapolis Association of Realtors ®, Zillow, the Minneapolis Federal Reserve and Zonda all gave presentations on the current state-of-affairs for the Minnesota housing market.
Throughout the conversation the need for zoning and permitting reform was mentioned as one of the top tier solutions to supply woes. David Arbit, economist for the Minneapolis Realtors ® highlighted how the lack of supply is causing double-digit price growth across the metro for two straight years, calling the inventory shortage a game of musical chairs. Arbit said that some homebuyers would otherwise be willing to sell, but they want to have a place to sit when the music stops.
Additionally, the supply crunch is having the greatest impact on lower income households and households of color. Luke Bell, Midwest Government Affairs for Zillow, mentioned that the Minneapolis-St. Paul metro has a 50 point black-white homeownership gap, 16 points larger than the next widest gap.
Libby Starling with the Minneapolis Federal Reserve highlighted the need for a wholistic approach in order to bring more desperately needed inventory to the market. Starling’s solutions included changes to zoning, modular housing, reviewing the state building code, changes to property taxes, expediting permitting and approvals, and reducing fees.
Finally, Danielle Leach with Zonda focused on new home construction and the substantial cost increases over the past decade. She discussed the lack of developed lots as well as the local mandates that add to the costs of a home such as luxury exterior mandates like stone exteriors and architectural designs.
The Legislative Commission on Housing Affordability will meet monthly throughout the interim in hopes of providing the full legislature new housing solutions for the upcoming 2022 Legislative Session.
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