Beyond the picket fence: How one city is creating more affordable housing

A decade ago, as a newly minted college graduate with a job in the film industry, Linnea Goderstad saw career opportunities and a creative vibrancy in New York City. What she didn’t find was a path toward affordable housing.

After abiding the rigors of an expensive one-bedroom apartment for a few years, Ms. Goderstad and her husband, David Blomquist, decided a change was needed. They moved back to their native Minnesota, calculating it would combine proximity to family, promising career paths of its own, and – importantly – the opportunity to live in something other than a platinum-priced shoe box. 

The journey has been promising. They’ve found good jobs and are now several years into owning a tree-fringed town house in a neighborhood they love in downtown Minneapolis. But if anything, what surprised them was how hard it was to find that dwelling, even after moving to a place far from robust coastal real estate markets such as Silicon Valley and New York. Between their own student debt and tightness in the supply of homes here in Minneapolis, they had to exercise both patience and bidding-war boldness to land their town house.

“You shouldn’t have to have an MBA to buy a house,” says Ms. Goderstad. “We’ve messed up as a society if that’s where we’re at.” 

The city around her broadly agrees. Minneapolis is now the scene of what may be the nation’s most ambitious urban experiment in trying to tackle the challenge of housing affordability.

Officials here are starting to implement an overhaul that ends “single-family zoning,” which has long reserved large sections of the city – like others around the United States – for detached one-family homes. In tandem, the city’s comprehensive “2040 plan” calls for new protections for renters, new demands on developers, and other moves to preserve and expand a now-thin supply of affordable housing. 

Time for different ideas

The impetus behind all this, in a city increasingly led by younger, post-boomer generations, isn’t merely about rent levels and land prices. It’s also rooted in ideals about inclusiveness and community – whether across racial lines, among renters and owners, or in the form of housing units of varying sizes and styles, from studios to homes for multigenerational families or cooperative ownership models. 

“We’ve kind of idolized that you will have a single-family home in the suburbs. That’s a bar you are trying to reach,” says Ms. Goderstad. “That’s great for people who love that lifestyle.” But, she notes, it’s also time to embrace “different ways to have a home.” 

For many here, the vision is also about environmental sustainability, a future where urban vibrancy aligns with planet-friendly lifestyles. The Minneapolis City Council approved the 2040 plan in December 2018. In the past few months, key steps have been taken to begin implementing it, including encouraging the conversion of single-family homes to duplex and triplex dwellings.

Other states and communities around the nation are watching the experiment here in the mittened North as they struggle with housing woes of their own.

“We are in a crisis that has actually been a long time coming and building progressively over time, where we’re seeing housing costs continue to grow faster than incomes in most metropolitan areas across the country,” says Solomon Greene, a housing policy expert at the Urban Institute in Washington. “There is no silver bullet. ... Multiple solutions are going to be necessary.”

That’s why he sees the Minneapolis venture as so important. While it’s far from the only urban area testing or considering new policies, it is one of the most aggressive in trying to expand the supply of homes through greater density. He also praises the city for combining this with initiatives targeted toward low-income residents. 

Yet beneath it all, the question remains: Can any city really ease the affordable housing crunch?

Other costs of living 

Mr. Blomquist remembers the moment a sense of housing insecurity first hit him. He was riding a bus toward New York City to start his career after graduating from college in Minnesota in the spring of 2008. Word reached him by cellphone: One of the people he would be living with had lost his job, so his plan to sublet a bedroom was disappearing.

“Oh, I’m homeless,” he recalls thinking.

A few sublets later, life became more stable. He navigated from an AmeriCorps internship into health care work, and the couple soon had their own apartment. But experiences like theirs – the challenges of finding housing, of saving money while also paying big college loans – have helped shape a generation.

As of 2015, millennials ages 25 to 34 had achieved a homeownership rate of 37%, well below the 45% seen by baby boomers and Gen Xers at that same age range, according to a 2018 analysis by the Urban Institute.

In part, this is the story of a generation that entered adulthood during a deep recession and may never quite catch up financially from those effects. But it’s more than that. 

For many Americans, middle-class lifestyles have grown harder to sustain as costs of college, health care, and housing have risen faster than paychecks. Half of all renters now spend more than 30% of their income on housing. Urban land values keep rising. These forces transcend any one generation.

There is progress. Incomes and homeownership rates are growing for young working-age Americans, census data show. Many millennials are successfully building careers in cities where home prices aren’t as prohibitive as in San Francisco or New York. 

Low supply, between the coasts 

Yet even in places like Minneapolis, a top-ranked city for millennial homeownership, it can be hard to find housing without a software engineer’s salary.

Ms. Goderstad and Mr. Blomquist discovered this when they began seeking a place of their own in 2016. They wanted a town house, both because it was more affordable and because they wanted to avoid yard maintenance. But they soon learned how many others wanted the same thing. They finally landed a deal by pouncing quickly, with an offer that was a bit above the asking price.

“For me, I was motivated more than anything else by climate change,” says Ms. Goderstad, referring to their choice to live in a place where she can walk, bike, or take mass transit to local attractions or to her job in event planning. Cities, she says, should be building “more complete neighborhoods,” walkable hubs that blend residences with commerce and cultural amenities.

For her, that includes a more diverse housing mix – from traditional dwellings to cheaper options like “co-housing” for young singles – suited to the varied needs of an increasingly diverse population. 

Widening the scope 

The city’s 2040 plan embodies those goals. It’s not just about housing but also about addressing inequality and responding to climate change. 

Mayor Jacob Frey, a millennial himself, says that while younger voters have embraced these overlapping goals, the vision isn’t exclusive to one generation.

“The model has changed. The American dream of the 1950s ... where the whole goal was white picket fence in the suburbs with the 45-minute commute to work and the corner office, is dead – or at least it’s not as treasured,” he says. “Young people want to live in a dense and vibrant city. In many cases they don’t want to own a car. They want to work in a collaborative atmosphere and live in a beautifully diverse city.”

The eruption of a housing revolution here wasn’t sparked overnight. First came practices of racial discrimination as an overt feature of real estate deeds in many Minneapolis neighborhoods. Then local experts say there were several decades of underinvestment in new housing, combined with sharp declines in federal spending on low-income housing.

In the 2000s, a boom-to-bust housing disaster engulfed the nation just as the giant millennial generation was starting to think about sofas and soaker tubs. Even prior to Mr. Frey’s election as mayor in 2017, Minneapolis was pushing for action. Housing had emerged as a critical issue.

In 2014 the city moved to legalize “accessory dwelling units” like garages or basement apartments. Then came an easing of rules so apartment developers didn’t need to devote so much space and money to parking spaces.

Lisa Bender, a new council member at the time who had campaigned on housing reform, says a common concern was that “our city is growing and we have a housing supply problem that needs to be addressed.”

All the activists

But that’s the case in many cities. Political analysts say Minneapolis took zoning and other reforms further than most because of a blend of liberal politics, a tradition of civic engagement, and an increasingly activist city council.

While the interest in new kinds of housing wasn’t limited to millennials, the shift in thinking had a demographic element. (Mr. Frey was elected to the council in 2013, alongside Ms. Bender, also in her 30s at the time.)

Ms. Bender says an upwelling of community involvement – countering the perennial clout of “not in my backyard” sentiments – came from groups focused on racial justice and transportation, not just housing. 

Some of the energy also came from politically active citizens like John Edwards. A graphic artist who moved to Minneapolis in 2012, he recalls attending a public hearing on housing, soon after Ms. Bender was elected to the council. 

The focus was on a proposed six-story apartment building at a major intersection near bus routes. Beneficiaries might include young renters like him, yet “there was just one kind of person” who showed up to voice opinions, Mr. Edwards says. Those were longtime homeowners who opposed it.

“That was shocking to me,” he says. He started a blog and Twitter feed about his own neighborhood, known locally as “the Wedge,” building a following in part by putting a comedic edge on his posts.

Mr. Edwards also helped found a group called Neighbors for More Neighbors (N4MN) to formally counter NIMBY viewpoints.

As city officials were shaping the 2040 plan with public input, blue or purple N4MN signs began to pop up on lawns or front stoops around the city, competing with red ones saying, “Don’t bulldoze our neighborhoods.” Ms. Goderstad became an active member of the N4MN group.

“One thing that really stood out to me at the end of the process [was] just how many people turned out to testify in favor of the 2040 plan,” albeit alongside many naysayers, says Mr. Edwards. “In my first couple of years in Minneapolis, it was rare to see anyone young testifying.”

Why it might not work

If there’s optimism in Minneapolis about housing, there’s also plenty of skepticism. Some residents, while saying they share the goal of affordable housing, don’t want to see the city zoned for greater density in such a broad-brush way. The passions are evident when the City Planning Commission meets about twice each month to review projects or weigh in on overall policies. 

“I plead with you all to consider what the homeowners are saying to you,” one city resident told commissioners at a recent meeting, urging opposition to a proposed apartment complex next to her home. “These apartments aren’t for people working at McDonald’s,” she adds, casting doubt on the notion that new construction does much for affordability. 

That’s an oft-repeated concern. While new construction can help the city by adding to the overall housing stock, the rents aren’t cheap – bringing worries of gentrification rather than housing-cost relief. 

Nichole Buehler, of the Harrison Neighborhood Association, shows up at the meeting to argue that an apartment development will displace some older homes that are truly affordable. “We need to really protect the affordable housing that we have,” she says in an interview later.

The 2040 plan aims to pursue both goals – more housing overall and more units for low-income renters – in part by what’s called “inclusionary zoning.” The idea is to call on developers to make a fraction of their apartments affordable to people of modest incomes. Some locals say the measure is too aggressive and may backfire.

“Don’t chase away private investment,” Steve Cramer, a former city council member who now heads the Minneapolis Downtown Council, a business association, tells commission members at the meeting. “Overregulated markets are less affordable markets.” 

Skepticism of private investment

Another city policy – pursuing an overhaul of its existing stock of federally supported public housing – also draws fire.

Facing a backlog in maintenance of its single-family homes, the Minneapolis Public Housing Authority has outlined plans to roll them into a new nonprofit, opening the door to private investment for their renovation. Although the housing authority is pledging that rents will rarely increase as a result, many residents are mobilizing in opposition, concerned about displacement or rising costs. 

“There wasn’t any guarantee that we will be staying in this home,” says Hibaq Abdullahi, who is awaiting details on what may happen to the rent-subsidized home where she and her Somali immigrant family live.

“We have a city [leadership] that is failing the people that it’s elected to serve,” adds Ladan Yusuf, another Somali American who has organized protests over the issue. She argues that the city could afford to maintain the homes without bringing in the private sector and that the move will benefit developers at the expense of low-income tenants. 

City officials say the needs of historically disadvantaged city residents are not being forgotten.

“We are doing a lot,” says Mayor Frey, referring to steps such as boosting the city’s own funding for subsidized housing and protecting tenants citywide, possibly with rent-stabilization rules. From those moves to zoning reform, he says, the goal is “to make sure that the precision of our solutions matches the precision of the harm that was inflicted” by decades of racially biased policies.

An easier rehab

On a nondescript street lined with single-family homes, the future of Minneapolis housing is beginning to take shape. 

Bruce Brunner now has a new career as a landlord after years of working at the Minneapolis-based retailer Target. He’s busy rehabbing a worn-out home here – not just remodeling it but converting it from a one-family dwelling to a triplex. 

It’s one of the early instances of the 2040 plan’s vision becoming real on the ground. As the city moved in November to implement key zoning changes in that plan, it gave Mr. Brunner the ability to do this conversion “by right” without the former uncertainty and bureaucratic hurdles.

“I was able to proceed without applying and pleading my case for a variance,” he says.

Inside the house, a contractor is hard at work amid stacks of lumber, some power tools, and loosely hung construction lights.

But soon, one spacious floor will become a four-bedroom apartment, and the other will be split into two more units – a one-bedroom and a two-bedroom.

By itself, the remodel will only be a few new units. The idea, though, is that this will be multiplied many times over, filling in for what many call the “missing middle” in American housing. 

“Over time we’re going to add and add and add,” predicts Mr. Brunner, who’s a fan of the 2040 plan. “As there’s more supply, the premium charged [by landlords] comes down because people have more choice. It does change the dynamic.”

The result probably won’t be falling prices, some real estate experts say. But it could help contain housing inflation.

Crisis at the bottom

“The 2040 plan to its credit does appear to be attempting to create affordability and housing opportunities across the city,” says Margaret Kaplan, president of the Housing Justice Center in Minneapolis. But “I don’t think that there’s enough in there in terms of tools and resources and programs to address the critical shortage of housing that’s affordable to families making less than $30,000 a year. It’s the hardest thing to do, but it’s also where the greatest shortage exists.”

She and other experts call for more public funds to support low-income housing, whether through vouchers or building public apartments.

But other steps could also help improve affordability for households at various income levels. Those could range from credit-score tutorials to streamlining the regulations facing builders. Another area of promise: cutting home-building costs through modular or factory-based construction. 

An eye on what’s next

Local leaders will surely have to keep adapting their plans based on the city’s experience and the vagaries of electoral politics. But Mr. Greene of the Urban Institute says experiments here could lay down a marker.

“A lot of other states are looking ... to see what happens and whether the sky collapses, which it won’t,” he says. In fact, Oregon has already enacted a law that will effectively end single-family zoning starting in 2021. California is trying to encourage more building across the state. Localities from Arlington, Virginia, to Los Angeles have also begun opening the door to more backyard cottages and other “accessory dwelling units.” 

To Ms. Goderstad and Mr. Blomquist, every duplex or triplex in this city counts.

That was the kind of home they could afford, after all. And whether it’s for renters or owners, they want other young people to be able to live in the city. 

“We have our problems, our inequalities,” Ms. Goderstad says. She was saddened when one friend who had hoped to live near her ended up moving out of town instead to find an affordable house.

“What makes me hopeful is just the fact that we were able to pass the comprehensive plan that we did.” It’s a vision not just about economics but about changing lifestyles – a point that resonates with bicycle commuters like her. “We need housing of all sorts.”