Housing affordability has hit the front pages as well as people’s pocketbooks, making this a topic not just for policymakers but for business leaders, health care providers, educators and local government. Even conversations around our kitchen tables talk about how it’s getting harder and harder to keep up with housing costs that are rising faster than our incomes.
As I research housing as a city council member in St. Louis Park and the executive director of the Minnesota Housing Partnership, I see evidence of this trend every day.
A new study by my organization, the Minnesota Housing Partnership, called “Market Watch: Hennepin County” provides data that underscores the challenge of so many suburban communities: How to retain affordability for our neighbors who reside in rental housing that is affordable largely because it is older and without the amenities of the newer buildings within an environment that is attracting investors focused on turning a healthy profit by upscaling their property.
One trend is clear: Population and economic trends are driving a dramatic uptick in property sales – and threatening displacement of lower-wage renters through rising rents and tightened tenant requirements.
How did we get here?
Vacancy rates have dipped to 10-year lows. When vacancy rates are below 5%, that signals an unhealthy rental market. Increased competition for the scarce apartments that do become available to rent pushes up prices.
Since 2010, the vacancy rate in the county fell from 6.2% to 4.4% overall. For apartments with rents affordable to low-wage workers, the vacancy rate is even lower at 3.4%. In this environment, property owners become more selective in tenant screening, and the incentive to raise rents is high. As a result, rents skyrocket and families have trouble paying the rent.
The number of renters in Hennepin County is rising. Our population is growing, but new construction hasn’t kept up with demand. The county saw a 22% increase in the number of renter households since 2000. Some communities are seeing even higher increases; Eden Prairie experienced a 52% increase, Golden Valley a 51% increase and St. Louis Park a 33% increase.
Wages are not rising as fast as rent. From 2000 to 2017 in Hennepin County, rents increased by 11% at the same time that wages decreased by 4%. When renters are burdened by these increasing housing costs, paying more than they can afford for rent, they are likely to have to sacrifice basic needs like health care, food or transportation.
Property sales are accelerating, with more than 1,000 buildings comprising 45,450 apartments sold in Hennepin County from 2010 to 2018. And each time a building is sold, rents typically rise, and renters risk being displaced.
What to do?
First and foremost, let your local leaders know that the housing affordability issue is important to you. Ensuring our neighbors can find an affordable place to call home is the foundation of a strong and vibrant community. We need to preserve the homes we have, even as we create new homes for our growing population.
There are a number of strategies communities can implement to preserve the housing affordability that already exists:
1. Preserve the housing you have, by instituting strategies and targeting investments that support purchasers who are committed to maintaining affordability.
2. Leverage the private market supply of affordable housing by providing incentives to private-sector owners to minimize rent increases through incentives like property tax reductions.
3. Implement tenant protections so that tenants have choices, support, time and clear information, especially when property sales occur.
Everyone has a role to play, so I ask: What is your community doing to preserve and create affordable homes?
Anne Mavity is a member of the St. Louis Park City Council and the executive director of the Minnesota Housing Partnership.