Report: Smart land use policies have increased housing supply and kept rent low in Minneapolis

As communities across the United States grapple with a national housing shortage and look for solutions, administrators can take a note from Minneapolis’s playbook. Between 2017 and 2022, the Minnesota city permitted 21,000 new units of housing, about a 12% increase, according to a Jan. 4 analysis from Pew Charitable Trusts. Statewide, housing stock comparatively went up by 4%. Local rent prices, meanwhile, have remained low compared to the state average.

Researchers attribute the city’s stronger than average housing growth at least in part to smart land use policy reforms made nearly a decade prior.

“Starting in 2009, the city enacted a series of policy changes that reduced and then eliminated minimum parking requirements, allowed construction of accessory dwelling units, and lowered minimum lot size requirements in residential zones, all with the goal of encouraging the construction of more housing,” the report says. “These changes culminated in Minneapolis 2040, a comprehensive plan that took effect in 2020 and codified the city’s commitment to expanding its housing supply, especially near commerce and transit.”

Policy changes over the last decade or so include the elimination of minimum parking requirements for new developments, encouraging the development of apartments along commercial corridors, establishing building height minimums in high-density zones, and permitting duplex and triplex construction on all residential lots.

So far, researchers noted the city’s duplex and triplex policy had a modest impact on the region’s housing stock, while the reforms promoting apartment building construction have notably expanded the number of available units. Among other actions, the researchers noted that the upzoning along commercial and transit corridors and the elimination of minimum parking requirements have streamlined financial and logistical costs, further lowering the barrier to housing development.

“These findings are in line with a robust body of research showing that jurisdictions that expand their housing supply experience slower housing cost growth than those that do not,” the report says. “Although some observers have worried that allowing more housing would fuel higher rents that lead to the displacement of some residents, research indicates that enabling the construction of more multifamily housing is associated with reduced displacement risk and increased racial diversity.”

Practically, the increased housing supply has kept down the cost of rent in the city, and it’s kept people off the streets. Between 2017 and 2022, the level of homelessness in Hennepin County, which includes Minneapolis, declined by 12%. Elsewhere in the state of Minnesota, it went up by 14%. And on average, rent growth in the city is 13 percentage points lower than the state average.

“Minneapolis renters are paying an estimated $1,700 less per year than if rents had increased at the same rate as in Minnesota overall. That makes it more likely that families of modest means can remain in the city,” the report says. “Minneapolis has shown a path to expand housing availability and tame rent growth by ensuring the availability of more homes. Policymakers’ move to allow duplexes and triplexes on lots formerly reserved for the most expensive kind of homes—single-family housing—is a step forward that has added a modest number of homes to date.”

For more information and to review the complete report, visit Pew Charitable Trusts’ website.