“There’s a great one report that (the Pew research Center) that was published a year or two ago, showing that reforms in Minneapolis have actually kept rents lower (than in St. Paul),” he said. “Minneapolis, thanks to their reforms, has gone down the path of housing abundance. The first two years of reform in Minneapolis had rent inflation of about 1%, which is well below wage growth so far, which is great.
“That was the first time in a long time that we’ve seen this in the Twin Cities: the increase in housing costs where rent or ownership was below wage growth. In St. Paul, rent increases were indeed limited to the mandated amount, but it was still a larger increase than in Minneapolis, and that was just on the front end.”
Minneapolis doubled down on policies aimed at making housing easier to build by expanding where multifamily and “missing middle” housing could go, updating built form rules and loosening lot-level restrictions.
These changes built on the monument Minneapolis 2040 plan that eliminated many zoning regulations for single-family homes and added new built-up districts to control density near business and transit corridors.
St. Paul voters approved a residential rent stabilization ordinance in November 2021, capping most annual rent increases at 3% and directing the city to create implementing rules and exceptions. The regulation was adjusted by the city in subsequent regulations.
A real estate agent’s view from the field
Patty Zuzek, a real estate agent at Fieldstone real estate specialistssaid that even with the recent reforms, Minneapolis and St. Paul remain difficult places to build, and buyer behavior is changing accordingly.
“Minneapolis and St. Paul are still very difficult to build in, just because of the extra costs for builders to be able to apply for permits and things like that,” she said. “Inventory has increased and we are seeing more people wanting to move to our suburbs, somewhere a little quieter, while still maintaining access to the downtown area.”
Zuzek, who served as regional vice president for the 2023 National Association of Real Estate Agentssaid the return to office trends could further reshape residential demand.
“My concern is that people now have to go back to work and people who have been away are going to come back in (to live downtown)?” she asked. “Our markets remain very different, the inner cities and our suburbs of the first and second ring.”
What actually changed for neighborhoods?
Much of the public conversation surrounding Minneapolis’ zoning overhaul has focused on the elimination of single-family only zones and the specter of triplexes.
Erickson said the practical outcome has been more modest and more compatible with existing neighborhoods.
“The triplexes were kind of a fear-mongering tactic since this debate started in Minneapolis several years ago,” he said. “But those really haven’t appeared, and part of the reason is that the package that was passed was designed to not actually allow those.”
He said the zoning changes created theoretical compensation without dramatically changing the scale of the neighborhood.
“(Triplexes) were allowed on paper, but not in practice,” he said. “They didn’t increase the floor area ratio for those structures. So you couldn’t feasibly do a triplex unless one of the units was in the basement or used the basement as space.”
The suburban price gradient
Zuzek said real estate agents need to understand how prices — along with sales and rental activity — are changing as buyers move out of Minneapolis and St. Paul.
“As soon as you leave St. Paul-Minneapolis and go into the suburbs, you see the market is very busy,” she said. “The suburbs on the first ring are very pricey because of the convenience, just because of the proximity to the city center.”
Development restrictions vary dramatically by location, Zuzek added.
“When we look at new construction versus existing construction, we don’t have a lot of green space in the first ring where we can build and develop,” she said. “You continue to our second rings, where we have more green space to develop and grow.”
Corridors, transit and increasing density
Erickson said the reforms in Minneapolis have opened up smaller apartment projects in targeted locations — a shift that real estate agents can see in new listings and redevelopment opportunities.
“The biggest success has come from more, I would say, smaller scale work,” he said. “We’re not talking about a 30-story building with hundreds of units. There’s been a real focus on the neighborhood apartments. That’s where we’ve seen the most potential unlocked.”
He pointed to city guidance that clarified where added density made sense.
“There’s a beautiful map that the city has put together,” Erickson said. “(Development) along many of these major arteries, close to bus routes or to the two rail lines, allows for greater density in those areas. And that’s where we’ve seen the most success from a land use reform perspective.”
Did the land reforms go far enough?
Zuzek said zoning reform alone in its current form cannot overcome rising development costs.
“You know, we have to change and take a step back and look at all the cost factors,” she said. “…The costs for permits, the number of agencies involved in a construction just to get the land ready or to build a house, is catastrophic.”
She made a sharp comparison with real estate agents who advised buyers about affordability.
“When I compare Minnesota to Wisconsin in terms of new construction, we can build the same house in Wisconsin for $40,000 less — just because of government regulations and entities involved in a construction process, the codes and ordinances and everything that goes into that,” Zuzek said. “I think they can go even further here with land and zoning reforms.
“As officers, our job is to be the educator and share that information with local officials, whether they’re city council members, planning commissions or whoever. We have to be the boots on the ground and have that conversation.”
Erickson and Zuzek each said the future of affordability depends on collaboration across the metro area.
“We are successfully building communities that are a long way from the Twin Cities,” Zuzek said. “We work with cities to bring affordable housing to different communities, and those are the areas that are really seeing success in building affordable housing and bringing in new workers.”
#Housing #affordability #Twin #Cities #varies #zoning #rent #control