ASk A Researcher

February 2012

Trends on the home front

Jane Tigan, Minnesota Compass

Jane TiganHousing is more than shelter. Our communities need stable neighborhoods where families can put down roots. Children need safe, stable homes and neighborhoods to flourish and succeed in school. With so much changing in the housing market, reports of volatile prices, it’s a good chance to take a step back and look at how all of these numbers are impacting our communities.

What’s the state of homeownership in Minnesota?

While the recession is technically over, and the housing crisis is on the front page of the newspapers less often, its impact is still being felt in Minnesota households and communities.

Although Minnesota’s overall homeownership rate is higher than the nation’s, the state still struggles to make homeownership a reality for all its residents, especially households of color.  From 2000 to 2007, the gap in homeownership between white households and those of color narrowed slightly. But since 2007 those gains effectively have been erased; for three years the gap has widened and today it is larger than it was in 1990.

Why have we lost ground on this measure? The housing crisis hit communities of color especially hard and homeownership rates for households of color went down faster than those of white households. There are a variety of reasons for this, ranging from lower incomes and higher rates of unemployment among communities of color (especially in Minnesota) to the fact that households of color generally have a harder time qualifying for traditional mortgages. Today, while nearly 8 out of 10 white households own their home fewer than half of households of color own their home. Compared to all other states, Minnesota’s gap is surpassed only by Connecticut; compared to other top metros, the Twin Cities is dead-last.

Interestingly, the story plays out differently between the central cities and the suburbs, which are increasingly host to homeowners of color. While Minneapolis and St. Paul’s homeownership gaps have increased consistently since 1990, the suburbs have seen a growing number and percentage of households of color. Still only half of all of color households in the suburbs own their home compared to 4 of every 5 white suburban households.

I hear a lot about how depressed housing prices are—has that made things more affordable?

In theory, housing affordability should improve when prices fall. In the mid-2000s, however, housing prices were falling in large part because of a sudden glut of foreclosed homes – the result of shoddy mortgage lending. Many home owners with adjustable rate mortgages faced ballooning monthly payments, and the share of households facing housing spending more than 30 percent of their income on housing (the U.S. Department of Housing and Urban Development's definition of "cost-burdened") increased rapidly, from 22 percent in 2000 to 33 percent 2007.

Since then, prices have stayed low, but housing cost burdens have stayed high. Why is that? For one reason, the economic crisis has meant that many people are out of work or earning less money overall. So while housing costs are going down, they aren’t going down as fast as income. With the ongoing challenges in job growth and unemployment, this high cost of housing could be with us for longer than we expected. And it’s not just an urban challenge: counties to the north, like Isanti, Kanabec, and Chisago Counties are also seeing some of the highest rates of cost-burdened households

The picture of rental housing is another reason why overall we are not seeing relief in cost-burden over all. Housing cost-burdens impact renters more severely than homeowners; half of all renters are paying more than they should on housing. This is especially true in the Twin Cities where by some accounts the apartment vacancy rate is as low as 2.8 percent, near historical lows. Among other things, tighter credit restrictions for home-loans has meant fewer people buying, which has spelled an increase in renting and high remand for those units, driving up pricing. This is a far cry from a few years ago, when I was offered a flat screen TV to sign a lease!

What about those who don’t have housing at all?

Another way that we see the housing crisis and protracted economic challenges manifest themselves is in the number of people experiencing homelessness. In 2009, about a year after the start of the recession, the Statewide Survey of People without Shelter counted 9,630 homeless persons in Minnesota, and put estimates of homeless closer to 13,000; 37.5 percent of those counted were children and youth. The count alone was 25 percent higher than in 2006. This is not only a challenge for the Twin Cities: the number of homeless individuals has increased in every region, especially in Northland where the rate of homelessness jumped from 29.8 per 10,000 residents in 2006 to 49.8 in 2009.

How can I keep up on what’s going on in housing in Minnesota?

Minnesota Compass is a great place to get a look at some of the key measures about housing. We also have a list of more measures and sites to get additional data like foreclosures, housing segregation, housing construction statistics. Our library also includes some great resources, including the McKnight Foundation’s latest Baseline Housing Measures report.

Have a resource we should list in our library? Let us know!

Jane works on Minnesota Compass and related projects that monitor economic and social change through indicators. She analyzes data and related information to understand and communicate trends in Minnesota. She helps make data from neighborhood- to state-level accessible and meaningful, in order to track changes and inform decisions that will improve our communities.

Jane earned a B.A. at the University of St. Thomas and a Masters of Urban Planning emphasizing in Community Development for Social Justice from the University of Illinois at Urbana-Champaign.

Featured trend

No change in median household income
aging trend

No change in median household income in most major cities

Most of Minnesota's major cities (10,000+ residents) saw no change in median household income between the 2007-2011 and 2012-2016 time periods, according to new five-year estimates from the American Community Survey. But 8 of 97 major cities in Minnesota saw median household income increase and seven major cities saw median household income decline.

See more median income trends.

 

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