Twin Cities housing affordability diverges under zoning, rent control

"Minneapolis, thanks to their reforms, has been going the housing abundance route. That first year or two of Minneapolis reforms had about 1% rent inflation, so far below wage growth, which is great. That was the first time that happened in a long time we've seen in the Twin Cities housing cost growth with rent or ownership below the wage growth."

"Minneapolis doubled down on policies meant to make it easier to build housing by expanding where multifamily and missing middle housing can go, updating built-form rules and easing lot-level restrictions. These changes built on the landmark Minneapolis 2040 plan that removed many single-family only zoning rules and added new built-form districts to guide 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 implementation rules and exceptions. The ordinance has been adjusted by the city in subsequent rulemaking."

Data since 2020 show a sharp distinction between Minneapolis and St. Paul housing outcomes. Minneapolis reforms reduced rent growth, producing about 1% rent inflation in the first years, well below wage growth and marking a rare period of housing cost increases below wage growth in the Twin Cities. Minneapolis expanded where multifamily and missing-middle housing can be built, updated built-form rules, eased lot-level restrictions, and built on the Minneapolis 2040 plan that removed many single-family-only zoning rules and added built-form districts near business and transit corridors. St. Paul enacted a Residential Rent Stabilization Ordinance in November 2021 capping most annual rent increases at 3% and directing the city to create implementation rules and exceptions; the ordinance has been adjusted in subsequent rulemaking. Brokers report that both cities remain difficult to build in because of added costs and permitting challenges, influencing buyer behavior.

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