3. Affordable and accessible housing: In 2040, all Minneapolis residents will be able to afford and access quality housing throughout the city.

Minneapolis is a magnet city attracting more residents and businesses each year. As a city Minneapolis is facing challenges as it grows, including a shortage of housing units that residents can afford, a rise in the number and percentage of cost-burdened households – especially among renters, and the presence of zoning regulations that have favored single-family housing at the expense of housing access since the era of segregation.

Housing Residents Can Afford

Minneapolis is growing faster than it has since 1950. The Metropolitan Council estimates that between 2010 and 2016 the city added over 12,000 housing units and more than 37,000 residents. With this growth comes increased demand for housing and an associated increase in housing costs and rents. As a result, housing units that were once affordable no longer are, and less housing is available for low-income residents of Minneapolis. 

The mismatch between housing supply and demand in Minneapolis not only contributes to displacing low-income Minneapolis residents, but also leads to that demand being met in communities outside of Minneapolis. With its existing built form and infrastructure, Minneapolis is uniquely positioned to provide new housing options with the lowest possible environmental impact in the metropolitan area.

Since 2000, Minneapolis has lost roughly 15,000 housing units that are considered affordable for those earning 50% of the area median income ($31,650 for one person/ $45,000 for a family of four). These units generally still exist, but they cost more to own or rent, making them unaffordable to this demographic.

In 2017, for the 13-county metropolitan region, the U.S. Department of Housing and Urban Development (HUD) calculated a median family income of $90,400. Based on this figure, 50% of the area median income for a single-person household is $31,650 annually (or an hourly wage of $15.22 for a standard workweek and year), and for a family of four it’s $45,200 annually (or a household hourly wage of $21.73 for a standard workweek and year).

Cost-Burden Households

The majority of Minneapolis residents are renters and renter households are growing at a faster rate than owner households. When broken down by number of households, the two largest groups of residents in the city are renters earning less than 30% of AMI, ($28,300 per year) and homeowners earning more than 100% of AMI ($94,300 per year). Most people of color in the city are renters while the majority of the city’s white residents are homeowners.

Since 2000 a growing number of residents, especially residents of color and indigenous people, have seen a decrease in household income preventing them from keeping up with rising housing costs. A decrease in the number of affordable housing units coupled with decreasing incomes greatly limits the ability of residents to find the housing they need throughout the city.

Throughout this document there are many references to Affordable Housing. Affordable Housing is rental housing with rent and income restrictions (typically 60% of Area Median Income or below) or housing for homeownership with income restrictions (typically less than 80% of Area Median Income) as governed by local, state, and federal housing assistance programs. In comparison to Housing Affordability, which is access to homeownership or rental options based on housing price relative to household income. The loss of affordable housing units and changes in household income have resulted in a greater number of cost-burdened households – households in which more than 30% of household income goes toward mortgage or rental payments. Forty-nine percent of all households in Minneapolis are cost-burdened, but this is not equal across racial groups. Over 50% of black households, and over 45% of American Indian and Hispanic households in Minneapolis are cost-burdened, whereas 1 in 3 white households are cost-burdened.

Impact of Zoning

Racial disparities persist in all aspects of housing. Until the 1960s, zoning regulations, racially discriminatory housing practices, and federal housing policies worked together to determine who could live in single-family houses in “desirable” neighborhoods. These determinations were based on race and have shaped the opportunities granted to multiple generations of Minneapolis residents.

Following the Great Depression in 1934, guidance from the federal government steered where private investment in housing could occur, this direction was called redlining. This practice denied access to mortgages in areas where Jews, African-Americans, and other minorities lived, as well as in the more densely populated and mixed-use parts of the city. Related guidance in Federal Housing Administration (FHA) underwriting manuals encouraged the segregation of land uses, also known as zoning, in order to reduce the financial risk of backing single family home loans near land uses deemed undesirable, such as factories and even multifamily housing. This guidance, from 1934, reinforced the approach that Minneapolis and other cities in the United States began years earlier through the introduction of zoning ordinances.

While the FHA promoted zoning as an effective tool for assuring a “homogenous and harmonious neighborhood, ”the FHA did not think zoning was enough to accomplish the segregation of the races as a means of protecting property values. The FHA underwriting manual also made the case for racially restrictive covenants, using language that described people of color as undesirable neighbors in the same vein as nuisances such as odors and high traffic: These practices allowed banks to deny mortgages and property owners to prevent the sale of a home based on race. As a result, areas of Minneapolis with higher densities and a mix of land uses experienced disinvestment, in part because banks did not lend in those areas.

These policies and regulations shaped the physical characteristics of Minneapolis and the financial status of its residents.  Although racially segregated housing is no longer enforced in these “desirable” neighborhoods the zoning map remains largely unchanged from an era in which discrimination was legal, and still contributes to disparities communities of color and indigenous people experience today such as, access to commercial goods and services, quality housing, and public transportation. 

To address these issues, the City of Minneapolis will expand opportunities to increase the housing supply in a way that meets changing needs and desires. This means allowing more housing options, especially in areas that lack choice and areas with access to frequent and fast transit, employment, and goods and services. It also means creating and expanding new resources and tools to  produce and preserve affordable housing, to minimize the displacement of existing residents, and to ensure housing is maintained to promote health and safety. The City will also need to invest in its residents, especially residents of color and indigenous residents, to ensure that it identifies and removes barriers to accessing and retaining housing.