Minnesota Tackles Housing Affordability
Housing Affordability and availability are a growing problem all across America, including in Minnesota.
As such, the Minnesota Senate established a select committee on this very matter and the Legislature created the Legislative Commission on Housing Affordability during the 2019 session.
As part of the creation of this important committee, the Senate asked the Minnesota REALTORS® to present a general market overview at the first hearing, which took place in August.
At the meeting, the REALTORS® presented data that showed that across the state home prices are on the rise and with wages stagnating, these homes were becoming less and less affordable.
In addition, they showed that the availability of these homes – especially the homes that are less than $300,000 – has been on a steady decline across the state for the past seven years.
“This is a distressing moment for our housing market and many experts agree on a common solution – we need to build more homes for first-time, workforce, and move-down buyers,” said Chris Galler, CEO of Minnesota REALTORS®, “In the metro, this means homes under $325,000.”
The big takeaways the REALTORS® were hoping to leave the committee with is that the median income is not rising at the same rate as housing prices, which means fewer people are able to afford to buy homes in Minnesota.
Several factors affect the housing supply, including multiple generations competing for homes at the same price point. Additionally, developers are having a more difficult time building new housing at the same price point.
People are actually living in their homes longer than they used to, which reduces the housing stock available for sale.
Couple these issues with other strains on finances, such as student loan debt, childcare costs and slow-to-grow wages, data trends indicate this gap in affordable housing will continue to grow.
Home sales in June were down 1.2 percent from June, 2018 in metro areas and down 1.6 percent across the entire state. And while that may seem like a small dip, they are down 7 percent from 2017 in Metro areas and 6.7 percent statewide.
The median home price in Metro areas has increased to $280,000 – a 5.7 percent spike since June of 2018 and a 14 percent increase since June of 2017. State wide the median price is a bit lower at $252,500, but that’s still 5.5 percent higher than 2018 and a 14.3 percent higher than 2017.
That data highlights why the REALTORS® involvement with the select committee is an important one. Legislators need to be reminded that this is more than just a problem in bigger cities like Minneapolis and St. Paul, and that it is impacting the entire state of Minnesota.
The REALTORS® stance is definitely pro-homeowner, or potential homeowner, as they believe homeownership builds vibrant neighborhoods, helps secure wealth, and creates an environment that is conducive to all residents – professionals down to students – the opportunity to succeed.