Is affordability really an issue?
The narrative of a housing affordability crisis in Minnesota deserves scrutiny when examined against the actual data. The numbers tell a remarkably different story than the one often presented in policy discussions and media coverage.
The fundamental reality is this: 99.82% of Minnesotans are housed. With approximately 5.7 million residents and only 10,522 experiencing homelessness according to the most recent Minnesota Homeless Study, the state has achieved what many would consider a housing success story. This isn’t a marginal victory—it represents one of the most successful housing outcomes in the nation.
Supply Meeting Demand
Perhaps even more telling is the relationship between housing supply and population growth. Over the past five years, Minnesota’s housing stock increased by 3.87% while the adult population grew by 3.90%. This near-perfect alignment suggests that new construction is effectively matching new resident demand—a fundamental indicator that the housing market is functioning properly.
This supply-demand balance contradicts claims of a systemic housing shortage. When housing supply keeps pace with population growth, market forces should theoretically maintain relative affordability absent other significant economic disruptions.
The Missing Financial Stress Evidence
Claims of widespread housing-related financial distress should be accompanied by clear indicators of economic strain. Yet when we examine Minnesota’s financial stress metrics, the evidence doesn’t support a crisis narrative:
Credit Card Debt: While Minnesota residents carry an average of $6,800 in credit card debt, this represents a manageable burden for most households. Only 6.65% of Minnesotans are behind on credit card payments—a figure that, while not negligible, hardly suggests widespread financial collapse.
Payday Loans Eliminated: Rather than seeing increased desperation borrowing, Minnesota has essentially eliminated its payday loan industry through regulatory action. The state capped interest rates at 36% APR in 2024, driving out predatory lenders who previously charged an average of 202% annually. Payday America, which handled two-thirds of the state’s payday loan volume, simply stopped operating in Minnesota. If financial stress were truly endemic, we would expect to see increased demand for these services, not their market elimination.
Bankruptcy Filings: While March 2024 saw 731 bankruptcy filings—the highest since March 2020—this represents a return to pre-pandemic levels rather than an unprecedented crisis. The temporary reduction during the pandemic was likely due to federal assistance programs and eviction moratoriums, making the current numbers a return to historical norms rather than evidence of new distress.
The 30% Rule: An Arbitrary Standard
The frequently cited “30% rule”—that housing should consume no more than 30% of household income—deserves particular scrutiny. This threshold traces back to the United States National Housing Act of 1937, developed for public housing eligibility criteria nearly 90 years ago.
As household finance expert Andrés Shahidinejad notes: “There’s no scientific basis or magic reason for (30%) being a cutoff.” Fortune magazine has called the rule “arbitrary and not very helpful for policy makers.” The standard was created in an era of dramatically different household economics, employment patterns, and lifestyle choices.
Modern households make different tradeoffs than their 1937 counterparts. Some prioritize location and are willing to spend 40% or 50% of their income on housing in exchange for shorter commutes, better schools, or urban amenities. Others prefer larger homes in less expensive areas. These are choices, not evidence of crisis.
Reframing the Conversation
The data suggests Minnesota has achieved something remarkable: a housing market that houses virtually everyone while maintaining supply growth that matches population growth. Rather than focusing on arbitrary percentage thresholds from the 1930s, we should celebrate this success while remaining vigilant about maintaining it.
This doesn’t mean housing policy should be ignored. Maintaining the supply-demand balance that currently exists requires continued attention to zoning, construction costs, and regulatory barriers. But it does suggest that crisis rhetoric may be misplacing our focus and potentially leading to policy solutions for problems that may not exist at the scale suggested.
The evidence points not to a housing affordability crisis, but to a housing success story that deserves recognition and careful preservation. Minnesota’s achievement of housing 99.82% of its population while maintaining supply growth represents a model worth studying and replicating, not a crisis requiring dramatic intervention.
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