A majority of Minneapolis’ households now rent their homes
MinnPost - March 6, 2019 - Greta Kaul -
Link here. Excerpt below:
The increase in the share of renters isn’t only due to people who previously owned homes becoming renters after the housing market crash, though. It’s also being driven by people who might have in the past become homeowners remaining renters for longer — even indefinitely.
Even as the economy began to recover from the recession, young people who might have been able to afford homes in early adulthood in the past can’t necessarily find places that fit their budgets.
That phenomenon is particularly noticeable in the Twin Cities’ starter home market (often defined at homes that cost $250,000 or less), where there is often fierce competition among buyers when the few such houses go on the market.
As a result, many people who in the past would have had money to buy homes now rent instead. In the Twin Cities region, the number of renter households making more than $50,000 per year increased by more than 27,000 between 2000 and 2014, even as the number of renters who make less than $50,000 per year has remained relatively stable.
It should be obvious, but this article fails to mention these underlying causes for the increase in the percentage of renters:
1 - Buyers who can't find affordable homes in Minneapolis don't just become renters in Minneapolis. They leave the city for suburbs where they can get more for their money. Although not recognized by this author or city leaders, we do compete with other municipalities for residents.
2 - The property taxes in Minneapolis are a real deterrent for first-time home buyers and a primary reason existing homeowners sell and leave.
3 - The graphs in the article show a massive increase in rental homes in North Minneapolis (Folwell, Jordan). Perhaps there should be more policy action on encouraging homeownership in these neighborhoods instead of allowing out-of-state investors to buy up homes by the hundreds and rent them out.
4 - Despite flying the flag of racial equity, the city leaders are encouraging long-term renters as residents. If racial equity was a goal, homeownership for people of color would be a priority. The best rent control is a fixed-rate mortgage.
Per 2016 Federal Reserve data, the median net worth of homeowners: $231,400. Renters or other nonhomeowners saw their median net worth fall to $5,200.
5 - Recent city policies met broad opposition (2040 Comp Plan, 2020 Neighborhoods, Upper Harbor Terminal development, Energy Audit requirements, etc.). The ignoring of this feedback communicates to residents (both homebuyers and renters) that their voice is really not important. The more dangerous side of this is that the policies cater to developers above all. What is cost-efficient for developers (i.e., no parking required for new buildings) is damaging to livability.
More and more owners will recognize that living in Minneapolis is a bad deal all around and leave. But maybe that is the city's goal.