Current state of Minneapolis housing (low income, real estate, rentals)

[ArcLyte]

Personally, I drive everywhere that I can, even when it's a short distance. I truly enjoy my vehicles and so I drive them. This is a very polarizing topic for folks though, so I can empathize with and understand both viewpoints (e.g. to have a car/multiple cars vs alternative or public transportation).

To the OP's comments: I think density is a good thing. The changes in the zoning code that will allow R1/R1A and R2/R2B to become 4 units is great. Homeowner landlords can already build a triplex on any R2B lot today through current city standards - 2 units in the R2B zoning code + 1 unit as an Accessory Dwelling Unit. 3 total units. The requirement is that you have to live on the property though, so it discourages absentee landlords from doing this.

I don't agree with the city's position in that more units = more affordability. Housing costs money to build. Even placing a generic studio basement/garden level unit in a house can run you north of $35,000 with low-end finishes. You've got costs coming in from all angles - HVAC, duct-work, potentially re-sizing your water heater, insulation, drywall, painting, electricity/new service panel, appliances, mirrors, vanities, etc. To earn your money back in a reasonable timeframe, you're going to charge at least $1200/month+ for this studio unit, especially if you're including utilities. This isn't going to create new affordable housing.

If anything, more units will just help to spread out the demand. We don't have enough housing (both rental and owner-occupied) in Minneapolis, and that's largely because we're out of land. The only way to actually create housing that is affordable is to get build/material and labor costs down. For those of us who remember the last boom-bust cycle, we remember that rent did not go down as people were losing their houses. In many cases, rent went up because of all the new demand! The only thing that went down were home prices (if you wanted to buy something), and labor costs. When/if we go through another crash, it will be completely different. We're in an era where we have folks from all over the world buying properties in Minneapolis and using them as rental income. These market factors dramatically change the demographics and outcome of a negative event, like a crash. I'm predicting that people in Minneapolis will have almost no impact when another crash hits. You're not going to see a bunch of houses going up for sale, as they're already owned by investors.

I'm not sure how we're going to get to "affordability" in Minneapolis other than through a government ran program (e.g. like San Fran does with it's housing).

Only time will tell...

[Cruz Azul Guy]

As one solution, I wonder why nobody has considered building units of super compact housing. I’m talking the examples they have in Ikea where a studio is 240 sq ft and they are somehow able to stuff a 2 bedroom apartment in like 500 sq ft. Assuming this could be approved and fit within zoning guidelines couldn’t this be a feasible way to build affordable new housing units?

[Glenfield]

Originally Posted by Cruz Azul Guy

As one solution, I wonder why nobody has considered building units of super compact housing. I’m talking the examples they have in Ikea where a studio is 240 sq ft and they are somehow able to stuff a 2 bedroom apartment in like 500 sq ft. Assuming this could be approved and fit within zoning guidelines couldn’t this be a feasible way to build affordable new housing units?

No one really wants to live like that unless they absolutely have to and housing in Minneapolis is not so expensive that they’re forced to resort to this.

[Cruz Azul Guy]

Originally Posted by Glenfield

No one really wants to live like that unless they absolutely have to and housing in Minneapolis is not so expensive that they’re forced to resort to this.

I would beg to differ on this. With millenials there is new interest in minimalist living, tiny houses, shared living, etc. I could be wrong but I would guess there is enough demand in the metro area to fill at least a few complexes....especially if it meant you could rent a new construction studio for $500/month or a 2 bedroom for $900.

[Min-Chi-Cbus]

Originally Posted by Cruz Azul Guy

As one solution, I wonder why nobody has considered building units of super compact housing. I’m talking the examples they have in Ikea where a studio is 240 sq ft and they are somehow able to stuff a 2 bedroom apartment in like 500 sq ft. Assuming this could be approved and fit within zoning guidelines couldn’t this be a feasible way to build affordable new housing units?

I actually think this is a big (short-term) solution to more affordable housing actually, yes.

[ArcLyte]

Originally Posted by Cruz Azul Guy

I would beg to differ on this. With millenials there is new interest in minimalist living, tiny houses, shared living, etc. I could be wrong but I would guess there is enough demand in the metro area to fill at least a few complexes....especially if it meant you could rent a new construction studio for $500/month or a 2 bedroom for $900.

Thanks for the clarification. In general, I agree with you that something will need to be done to address affordability. However, I would say that there already are tiny units available downtown (Northeast has a couple complexes like this [1], and the uptown area has at least one), starting at about $3/square foot (500 squares for $1500). Add in a parking stall, renters insurance, and utilities and you'll be at or over $2000/mo for a studio apartment.

It's cost prohibitive to build a complex of tiny units while renting them for bargain prices, so there would need to be a forcing function (usually government or other entity subsidizing part of the costs). The problem largely lies in the cost to build the building. The land alone in a desirable part of Minneapolis can start in the hundreds of thousands of dollars.

At $500/month, one would have to take a loss to make the numbers work. You're also adding a lot of unnecessary exposure to your portfolio (think risk). And, if $500 is the maximum budget that a tenant is working with, then who's paying for the utilities and extras?

While there is an interest in minimalist living and tiny houses, most of those projects are boutique and not practical investments. At $75,000 ($386/sq ft) [2] for a decent looking but not over-the-top tiny house, you're basically gambling if you ever plan on selling the home. Think about that price-point for a minute too... almost $400 per square foot for something with no utilities and no land. Sure, you can hook the house up to your truck and travel with it, but that price per square is higher than many of the houses in the TC metro. You'd be better off going to Morrie's Luxury Auto and buying a brand new Bentley off the lot. Your return on investment (the loss when you go to sell) is at least quantifiable, and you can roughly estimate the number of buyers who may want to take the vehicle off of your hands when you're done with it. With a tiny home you get none of the assurances but you assume all of the risk.




[1] https://www.apartments.com/coze-flat...is-mn/gh80dhw/
[2] https://tinyhouselistings.com/listin...-available-now

[Cruz Azul Guy]

So to clarify, the $500 and $900 figures were based on zero math and analysis. My point is that the costs would be lower to build smaller units and that could be applied to the price to be able to offer the market a budget option that doesn’t currently exist. We all agree that the city needs more affordable units....I just think this is one of many solutions that should be considered.

[Thedosius]

"Micro" apartments are already a thing on at least a "micro" scale-

Tiny apartments are invading Minneapolis, one $1,000 rent check at a time | City Pages

[Cruz Azul Guy]

I know I’m reviving an old topic here but I found this article and was surprised to see that one of my affordable housing solutions is again happening here. You still a naysayer on tiny apartments Glenfield?

http://m.startribune.com/wave-of-the...nth/563253662/

[Glenfield]

Originally Posted by Cruz Azul Guy

I know I’m reviving an old topic here but I found this article and was surprised to see that one of my affordable housing solutions is again happening here. You still a naysayer on tiny apartments Glenfield?

Wave of the future? Downtown Minneapolis micro units rent for $1,250 a month | Star Tribune

Originally Posted by Glenfield

No one really wants to live like that unless they absolutely have to and housing in Minneapolis is not so expensive that they’re forced to resort to this.

I stand by these comments. I have seen people living in 64 SF shacks made of cardboard because that is what they could afford. It wasn’t their first choice.

The real motivation for building these is in the article you linked to. The developer can charge more per square foot for a small apartment.

In any event, these tiny apartments seem likely to become short term rentals rather than long term housing for anyone. The short term rental use of new apartments is a problem that is exacerbating the housing shortage.

https://www.minnpost.com/metro/2019/...-term-rentals/

Does anyone on this forum plan to downsize to 240 SF?