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Minneapolis has been lauded in the national media for its housing policies, specifically the 2040 comprehensive plan, which increased allowable housing density throughout the city, reduced parking minimums and legalized triplexes in all neighborhoods. While reducing barriers to new housing construction helped to stabilize rents for parts of the housing market, the benefits have not been equally shared by all renters.
Data show that rents have risen much more slowly in Minneapolis compared with other cities since the COVID-19 pandemic; however, top-line numbers mask significant disparities among income groups. Average rent data may show stable or even declining rents relative to inflation, but rents for lower-income renters are rising much more quickly than those for affluent renters. A household is considered cost-burdened if it spends more than 30% of its income on housing. Our analysis of the most recent census data available shows that the share of all Minneapolis households that were cost-burdened declined slightly between 2018 and 2023. In 2018, the census estimates that 48.2% of Minneapolis renters were cost-burdened, and by 2023, that number had fallen slightly to 46.7%. However, all of the drop in cost-burden rates happened among middle- and upper-income renters. While the cost-burden rate for renters making more than $50,000 decreased by 1.5 percentage points, for renters making less than $50,000, the share of cost-burdened households increased by 7.5 percentage points, meaning over 80% of lower-income Minneapolis renters were cost-burdened in 2023. To be clear, Minneapolis is doing somewhat better than many other major cities. At the same time, 4 out of 5 low-income renter households struggling to pay rent does not suggest that Minneapolis has solved the problem of housing affordability.
Pandemic aid and the corresponding eviction moratorium provided some relief, but those resources are long gone, and with the federal government shut down and seeking to slash the social safety net even further, Minneapolis renters will continue to struggle without more state and local intervention. We agree and support the 2040 plan as an essential step to increase housing supply, as we note above; the growth of market-rate housing geared toward higher income renters is helpful, but far from sufficient to reach those most in need. Especially with the perfect storm of high interest rates, tariffs, rising construction and labor costs, new permits have cratered throughout the county, and Minneapolis is no exception.
Despite dwindling federal support and a lack of private-sector construction, there is a lot that can be done at the local level to support broad-based housing affordability. More affordable supply is necessary, but so are renter protections. Minneapolis voters have authorized the city to create a rent stabilization ordinance, which represents a vital pathway to stop the bleeding and prevent rent gouging and eviction. High rents directly lead to eviction and homelessness. Research consistently shows that rent stabilization keeps rents down and prevents eviction and displacement. As the city struggles to tackle persistent homelessness, the best way to stop homelessness is to prevent it from happening in the first place.
While the St. Paul rent stabilization policy has been accused of reducing new construction permits, the permit data itself does not suggest that rent control was the main cause of the permit slowdown. First, as mentioned previously, new housing permits have collapsed everywhere due to larger macroeconomic forces that cannot be attributed to St. Paul’s rent stabilization policy. In addition, year-over-year permitting in St. Paul began its decline nine months before the election and two months before the rent stabilization ballot initiative was even announced. A well-crafted rent stabilization policy, along with just-cause eviction protections, should be considered as part of the toolkit of policies needed to help working-class renters stay in their homes.
We can and should celebrate the positive reforms Minneapolis has made on housing over the past decade, but we can’t pat ourselves on the back and say “mission accomplished” when the best that we can say is things have gotten worse here at a slower rate than other communities. In an era of unprecedented income inequality, we would ask policymakers to look beyond top-line numbers and ask how policies affect various income groups differently to get a fuller picture of what is really happening, so Minneapolis can truly be a place everyone can call home.
