Minneapolis is experiencing an affordable housing shortage. Proponents are arguing that demolishing low value homes and building new housing will create new affordable housing. The reality is that new home costs are too high to produce new affordable housing without government subsidies. Unit costs for recent projects approved by the City’s 2017 Affordable Housing Trust Fund (AHTF) are $275,000 to $300,000 per unit. No private developer will be able to build housing cheaply enough to have rents low enough for our low income residents. All new housing will be for middle and upper class residents.
Who will benefit? Corporations. In 1992, 8% of rental property in the United States was owned by limited liability corporations. Today, 29% of rental housing is owned by corporations. They want to come into our community, buy our homes and turn them into rental property for corporate gain.
Existing affordable housing will also be lost. Starter homes will be the first housing demolished because they provide the most profit when upsized. This will reduce existing starter homes and make it harder for the poor to build wealth.
Also, home values overall will increase. We have seen a substantial upsurge in homevalues in our lower and middle value communities as speculators start to enter our housing market. Once all homes can be demolished, their values will go up becaue every home could be purchased by a speculator. This will make Minneapolis less affordable at a time when we need a more affordable city.
Minneapolis needs to work to keep the City as affordable as possible. Home ownership is one of the bedrocks of building wealth. The City must actively work to preserve its single family homes and duplexes. It also needs to invest in real production of affordable housing, but that will take government resources.
Private investors will not produce affordable housing, no matter how many homes are demolished.