Are your eyes deceiving you?

Feb 17, 2023

The apartment and senior living sectors must be overbuilt. I mean, just look at all the new buildings as you drive around the suburbs. There’s just no way we have enough demand for this many units. Or do we….?

Well, this topic can once again serve as a keen reminder that, “It’s impossible to know what you don’t know”.

According to a new research study, the Twin Cities region needs 18,000 new housing units annually to meet demand.

So forget about all the new developments you see while driving around Twin Cities’ communities because regardless of all of them, we’re still running short.

However, 18k units annually is no easy task as the region has been running a sizable deficit most of the last decade, sometimes falling behind as much as 30%. A new report from The Itasca Project details the extent of housing needs in the Twin Cities and how leaders from corporations, government, nonprofits, and other sectors can aid in solving the shortage.

The Itasca Project is a local organization comprised of over 70 Twin Cities business leaders collaborating on solving regional issues. Its new report on metro-area housing needs identifies strategies, like public land acquisitions, to lower costs and increase housing production, with a goal of creating 18,000 new units of housing annually in the region until 2030.

As much as people might want to migrate to work for one of our great companies or businesses we have in the Minneapolis-St. Paul metro area, if they can’t get housing, they’re not going to come,” said Collin Barr, co-chair for Itasca’s housing affordability team.

There isn’t enough housing to meet demand in the Twin Cities due to lowered production in nearly all types of housing — like single-family, market-rate apartments, and affordable homes — from 2010 to 2020, a time span following the Great Recession, Barr said.

This decline can be attributed not only to the Great Recession but also to a lack of land zoned for new, high-density housing and rising construction costs.

The Itasca Project’s housing team, with help from the Federal Reserve Bank of Minneapolis, set the goal of developing 18,000 new units of housing annually in the region from 2020 to 2030 to solve the shortage.

Twin Cities developers rarely hit that mark. According to the report, housing production from 2011 to 2018 fell far short of 18,000 each year. 

The report said that this lofty goal of 18k units annually until 2030 represents a 30% increase in overall housing production compared to the 2010 to 2020 period.

To meet the region’s housing needs, the report identified several solutions that private companies, public entities, and nonprofits can pursue — that require investment beyond their day-to-day operations.

One such solution is preparing large swaths of continuous land for new housing developments. There’s not much vacant land available for development in the Twin Cities, but there’s plenty of developed land that isn’t being actively used. This unused land is ripe for new housing developments, Barr said.

This is where local governments could step in: They could acquire the land, rezone it and mitigate the environmental issues, making it ready for a private developer to take over. Another solution is increasing the local government’s approval of higher-density projects.

A lack of housing is also a business matter, especially with the region’s historically low unemployment rate. Local corporations could communicate the importance of housing to all levels of government or channel funds to housing developments.

Even with a great need for housing, there are signs of progress. The Twin Cities region remains robust economically and continues to be in the top tier nationally regarding low unemployment, wage growth, and overall desirability.

Sources: Minneapolis / St. Paul Business Journal

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