Fourplexes will not create affordable housing

The Minneapolis 2040 Comprehensive Plan has proposed that all single-family homes and duplexes be opened to being bulldozed and replaced with fourplexes. It also proposes that developers be allowed to build skyscrapers along transit corridors, which includes most of the City.  The presumption is that somehow this will result in affordable housing.

First, no new affordable housing will be built without government subsidies because new construction costs are too high. The term sheets for housing being built by the Minneapolis Affordable Housing Trust Fund show units are running $275,000 to $300,000.  New housing is simply too expensive for low income persons.  You can see how much affordable housing is costing the City here:

Lee Schafer from the Startribune found the same thing. He spoke with affordable housing non-profits and also found that new units are running about $275,000 to $300,000, far more expensive than what a poor family can afford:

It is clear – no new affordable housing will be built without government subsidies.  The 2040 Plan does articulate the need to create new affordable housing with government intervention but  provides no concrete action steps on how it will do it. You can read the City’s statement about affordable housing and the lack of concrete action steps under Policy 43 here:

Because of this, it becomes even more important to preserve existing affordable housing. The plan says nothing about stopping tear-downs, the practice of demolishing smaller, more affordable homes and replacing them with much larger houses. The 2040 Plan could ban this practice to preserve existing housing but it does not.

The 2040 Plan also proposes up-zoning every single family home so it could be bulldozed and replaced with a fourplex.  This will further reduce affordable housing as the most cost-effective houses for developers to bulldoze will be those that are cheapest.

One theory put  forward by advocates of up-zoning is that by expanding the overall housing stock, simple supply and demand means that housing costs will go down. The problem is that Minneapolis cannot unilaterally build the region into affordable housing because it is less than 10% of the region’s housing market.

Also, affordable housing is dependent as much on demand as supply.  We have seen wage stagnation for many residents and substantial declines in wages in some of our minority communities. The problem of affordability is as much a problem of the wages of those who would purchase homes as it is of home prices.  Even by increasing the availability of homes, it does not mean that people will be able to afford them. We need more education and job training programs.  We need to attract more businesses to Minneapolis to increase competition for employees and raise wages. We need programs to get people out of poverty.  We need to deal with the systemic racism that has reduced incomes in our minority communities.  To have a real housing policy we need to deal with both sides of the home buying equation – home prices and income levels of residents.



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