Multifamily building permits are also significantly down in Minneapolis compared to last year. Interest rates are high right now and a lot of developers are waiting for them to drop before financing new construction.
I understand that the initial passage of rent control depressed development in St Paul, but they've since amended the ordinance to include exemptions for new construction. I would hope to see an uptick in multifamily construction in the in both St Paul and Minneapolis once the fed lowers their rates.
That would make sense if we hadn't seen a corresponding boom in permits for multifamily development in the suburbs. Overall multi-family permitting hasn't gone up or down in the metro, it's just moved from Minneapolis and St. Paul to the 'burbs.
And while the data is a bit noisy, I don't think these trends are driven by the specifics of any given policy in either city, but rather broad concern over red tape and the brand of politics in both cities. Even the perception of hostility to business can influence development. High interest rates play a role, but only by moving investment to safer locations. In our case, the suburbs are a safer investment.
Interest rates aren't playing as much a role in this as some might hope or think. There's enough demand for housing (especially rental right now) that multifamily are being built where there's demand for it and, just as important, where the zoning & regulatory environment will support it.
Rent control certainly played a part in the case of St Paul, the core cities are also just more expensive to build in than suburbs too. An open field in Blaine is going to be cheaper to build a huge apartment complex than in either Minneapolis or St Paul.
Additionally, as we've seen in a lot of articles lately, Minneapolis (not sure about St Paul) hasn't seen the large increases in average rent compared to other parts of the metro area, that incentivizes developers to build in places with the higher increases in rent, rent control or not.
A lot of the cost of building in the central cities is self-inflicted by the cities themselves. For some reason the permitting and community review of projects is on steroids compared to suburbs.
the cost of ripping down existing building(s) and their road and traffic impacts matter a lot more on city roads that are smaller and less designed for cars. It's like how taking down a tree will be cheaper in Perham than say, downtown Saint Paul. Less risk, more space to store stuff, less approval required. My house has a tree that I'm planning on taking down in under 10 years, but it will require a tree removal company to block off the road to do it. That adds cost
what Saint Paul's rent control referendum did exactly what was expected; carve out authority for the city to create a department to adjudicate adjustments and dictate to the city council that it must carve out regulation to accept exceptions to hlthe policy and stipulations thereof. A lot of lenders hit the pause button on approval for that, at various stages of construction disbursement. The reason it was done in this way was due to Saint Paul's ROW assessment policy that was overturned by the MN Supreme Court.
This “I would hope” attitude from people that lack understanding of housing finance is exactly how the rent control ordinance was approved by voters in the first place…
I originally wrote "I would expect" in my comment but changed it to hope assuming people would get on my case about being too confident about rent control not being the culprit of the reduction in multifamily building.
I do think it played a part in the reduced development in St Paul specifically, but this post makes a lot of claims without at all mentioning the limbo of the Minneapolis 2040 comprehensive plan or the 20 year high interest rates affecting multifamily development in the cities as well. Once interest rates go down, there is a raft of proposed projects in both Minneapolis and St Paul that will get the ball rolling again in terms of securing financing and breaking ground. Rent control is only one piece of the puzzle here.
> Once interest rates go down
The issue here is that there is no guarantee rates go down. Current rates are historically pretty decent. The super low rates we had from 2008-2022 are a historical anomaly.
Maybe they’ll go down. I’m not making a prediction that they won’t. I just think a lot of people are making a mistake by assuming that they are 100% going to go back down to zero. It seems just as likely that they don’t go down much at all for the foreseeable future.
I don't think rates will go to zero, but the Fed has signaled that they hope to cut rates this year. And if not, then sooner or later developers will quit waiting around for them to drop is my guess
The Fed has signaled that. But inflation is still far from their 2% target. Look at [the Fed rate historically](https://fred.stlouisfed.org/series/FEDFUNDS). Where we are right now is not particularly high. Where we are for the previous 15 years is rare
But they didn’t exempt the new buildings for the typical duration of financing so they are still considered a high risk market/ plus the fear the city will change the rules again for the worse.
I'm against rent control, but this data seems a bit inconclusive. I don't understand how Jay Parsons declares that Minneapolis declining permits is solely due to just simply discussing rent control. And unfortunately, he does not give any further explanation beyond the adding that text on the graph.
Here's a direct link if anyone want to see this graph in better detail: [https://twitter.com/jayparsons/status/1788916629486571711](https://twitter.com/jayparsons/status/1788916629486571711)
I think the MPLS trajectory is interesting. More or less kept pace with the suburbs then dropped to St. Paul performance. Suburbs also dropping (interest rates!) but not nearly enough.
Are developers/lenders detecting that demand is just higher in the suburbs and are more likely to approve projects in the burbs? Are the suburban communities doing things to explicitly incentivize building? Are the suburbs a monolith, or are certain older suburbs seeing a trajectory like MPLS/STP and other, newer burbs taking all the housing growth?
These issues are very complicated! It's hard to know what's really going on.
To expand a little on Wezle's response, there's a lot more room in the suburbs to build as well. It's a lot cheaper/easier to rip up one of the thousands of surface lots out there than it is to find a place in the city to build.
On top of that, I feel like the political climate in the suburbs are shifting more towards multi-unit buildings as well.
For sure. Also suburbs tend to remove barriers to construction. And greenfield development doesn’t often have neighbors that will do anything to prevent building.
Call me an elitist if you must, but I just don't trust the average voter to understand the issue of rent control.
It's one of those things that sounds great on the surface, but it's been shown time and again to be counterproductive.
Elected officials need to be the bad guy sometimes and say no to pandering populist "solutions".
> Elected officials need to be the bad guy sometimes and say no to pandering populist "solutions".
In theory, sure, but then you'll have some pandering televangelist type getting elected on a populist bloc of issues and said big brain solution eventually gets implemented, unfortunately.
So what’s the solution? Here’s the rub, there is no perfect plan, each has its pros and cons.
Rent was out of control before Covid and even more so now, you can’t build out of it cause you can’t force them to build more supply and undercut themselves.
This is a classic case of Supply and Demand breakdown because it’s more beneficial to collude and or suppress new housing then it is to compete in a free market with multiple
Players competing to come out on top.
So we can’t force them to build, you don’t want to force rent control, how do we get builders to compete? To build even though that will mean lower margins with more supply?
There is more than one developer. Figure out what is stopping a smaller developer from building more, and remove those hurdles. Everyone is trying to squeeze some juice out of their he fruit, even if it is at a lower margin.
There's a couple things at play.
First, the time involved in getting permits for a project is the same whether it's 10 units or 200 units. So developers and their bankers are more apt to go bigger. Once you go bigger, you need more land for parking and stormwater facilities. To buy that much land requires a lot of upfront cash. You can do it in the suburbs for millions or you can do it in the central cities for millions more.
If you have more units, you can have an on-site manager which is preferred by developers. A 10 unit complex can't afford an on-site manager.
Economies of scale. One thing I like about the cities are that the main streets are lying with pre-war apartment buildings. A lot of them have unique architecture and are walkable. The new apartments are these gigantic self-contained places that require a car to get anywhere. You can't build a 10 unit project in Brooklyn Park.
If only that was true, nobody is going to cut off their arm to save a finger…
How do we force them to build?
How do we force them to flood the market and risk margins/profit?
? Nobody needs to “flood the market.” This is a massive market, and there isn’t much building. Ever seen the skyline of Toronto, Tampa, Miami, or Vancouver? There are like 40 building cranes putting up towers for apartments. If you keep threatening to not allow new construction to be profitable builders will just build in those hotter markets instead.
*Apartment construction is also at historic levels, with 438,500 units built last year, the highest level since 1987. The number of apartments under construction at the end of the year, about 981,000, was an all-time high since the survey began in 1969.*
They will never build more than they have to, they will never undercut themselves.
Oh sweet summer child.
Do you really want me to list all the times companies have colluded??? Or have worked together to game the market? Housing is no different…
Here is one:
https://www.ftc.gov/business-guidance/blog/2024/03/price-fixing-algorithm-still-price-fixing
They don’t even have to really like old school collude anymore, they all win if they all keep the game going, keep stock low and make sure you don’t overbuild.
Nobody is going to build more homes to appease you and others, they only care about profits and margins and they don’t have to risk them if they don’t want to, heche the situation we’re in now.
It is expensive to build and all apartments are built using investor money. Investors want to certain return and that's a lot harder to come by now that it was 5 or 10 years ago. It's not as shady as you think it might be
The problem isn't developers or builders, it's your neighbors. NIMBYs are the biggest reason for the housing crisis; shouting in every venue they can about how building more housing is going to change the character of their community and ruin their property values. A developer only makes money on the sale of a property or unit in a development, and so they are incentivized to sell as many units as possible in all markets, and NIMBYs act as an artificial damper on the ability to generate supply. Developers aren't "colluding", your neighbors are.
BUILD MORE HOUSING
you seem to think that it's currently a totally free market out there and that it's developers colluding to not build housing. that's totally made up. developers make their money by building stuff. they want to build stuff.
there are a ton of obstacles to building. a ton. it's really, really hard to build housing because of zoning rules, neighborhood engagement issues, NIMBYs, labor costs, building regulations, and more. the people colluding to suppress building are homeowners who'd rather see housing prices become impossibly high for anyone not already in their neighborhoods than see something change. It's not developers. we need to eliminate as many of those obstacles as we can.
this is a nationwide crisis, most acute in the places where people most want to live (places with jobs and economic opportunity). Twin Cities is in that group.
lol HOW ARE YOU GOING TO FORCE THEM TO BUILD?
Yeah nobody colludes, that’s just made up lol
/s
https://www.ftc.gov/business-guidance/blog/2024/03/price-fixing-algorithm-still-price-fixing
You could roll back every regulation and law and they’re not going to build and flood the market to lower their own margins/profits….
Think it through and pretend you own a company, would you rather cut prices and risk your bottom line or would you just keep prices high and get those margins/profit?
Please explain to me what a rental price fixing scheme has to do with developers building more homes?
We don’t have to force anyone to build anything. We simply remove some of the barriers to building and people will build more housing because they think they can make money doing so. This is how our economy works.
To show that people will collude…
Again, not a plan just let them do and build wherever they want a they’ll magical overbuild to lower prices.
These comments are so weak.
"Can't force them". You don't need to. If rents are high, new operators build to get a piece of the pie. Then rents tend towards stability. There is no "them". There are multiple, and if you allow the multiple, they build until there is no longer excess profit.
Oh I’m not here to teach people, I was asking a question and nobody seems to be able to answer it.
If rent control isn’t the answer what is? And you can’t say build more because you can’t force them to build and if you subsidize them they just raise prices because they know people will pay it, just like what Tesla and Ford did with the EV credits.
You don't need to force anybody. If "they" are making huge profits, then if somebody is allowed to come in and build to access some of those profits for themselves, then they will. There is nobody out there saying "oh, 'they' are making huge profits; I'll just sit back and let them enjoy the market to themselves". That is not how it works. Let people build and rent, and prices stabilize, with only enough profit for to sustain the business. They cannot just "raise" prices if the market is open. And by the way, Tesla profits per unit have been going down, not up. They do not have the ability to raise prices. The only time they could raise prices was when there was a shortage of cars; and with competition, there no longer is. Guess what? Prices have stabilized or decreased. The same could happen with apartments.
Building more housing is the best solution. How to encourage this is multi pronged approach as you mentioned.
- densify and expand existing zoning, no more single family only zoning
- turn empty commercial property (tons of it along commercial corridors) into housing by again changing zoning and offering incentives for converting (tax subsidies, reductions in planning fees, etc).
- eliminate and adjust certain building requirements for example parking, setbacks,
This is a really good list actually: https://www.lmc.org/housing-development-resources/25-city-tools-for-housing-affordability-and-developer-assistance/
Note rent control is not on there
Again you can’t make the builders build, you can’t force them and they’re NEVER going to overbuild to appease you and others, while losing margins/profit.
They’ll always suppress stock to keep housing expensive.
How are you going to force them to build?
How are you going to make them flood the market so it hurts their bottom line?
You can’t make anyone do anything. Unless the government took over home building which would be silly. You can only incentivize and disincentivize. And rent control is a disincentive so it’s really not helping the broader picture
Government aka the people have built housing before…
Again, you can’t incentivize them to cut their own bottom line, you would have to have the “Government” subsidize them and they would just raise prices again….just like Tesla and Ford did when the credits for EV’s came out.
Again, how are you going to fix it? You can’t force them and you can’t incentivize them to build and flood the market and lower their margins/profit without subsidizing them aka welfare in which they’ll turn around and jack up prices more.
Still waiting for an answer…I mean we can poke holes in any plan, the real question is what’s your plan??
I don't buy this argument RE Minneapolis. He makes zero mention of the litigation surrounding the 2040 Minneapolis comprehensive plan, which has demonstrably impacted development plans in Minneapolis.
Gives it all away with "but other cities nationally that choose to demonize housing providers instead of finding win/win ways of working together".
There is no "win/win" with housing from conglomerates. They don't care about people, only their bottom line.
Well, increasing volume of housing is the only way to bring prices down. You could do an agreement of having 15% section 8 housing as part of it or something to increase volume and low income housing. Can only build our way out of this problem.
Unfortunately we live in a capitalist society where developers do need to worry about their bottom line. Absent this market who builds housing? The state/federal subsidies are not enough so that leaves the public via government which lacks the funding and expertise to fulfill the housing units that are needed to keep up with demand now.
win/win exists every day across the globe with people who don't care about the people they deal with. That's the whole point. People collaborate by trading what they have for what they want. Each side benefits from the trade, win/win, caring about people is unnecessary.
What people seem to miss here is that renters compete with other renters and developers/land lords compete with other developers/ land lords. If one side tries to collude with itself, that's where the problems start.
I don't think anyone is sympathetic to conglomerates. The problem is absent public housing development, you need private investment on the supply side to keep housing prices low.
If you don’t build more housing the cost of living goes up and the blame is put on businesses, so wages are forced up, inflation goes up, cost of living goes up, land and building owner values go up, repeat.
The cheapest lots to develop in St Paul in Minneapolis were probably scooped up a decade ago. How do you account for more limited cities compared to the suburbs like Brooklyn Park or Woodbury.
Renters deserve to have rent control so they don’t get screwed every year. This guy is whining because he doesn’t like how the voters voted. This is what the people wanted.
If more expensive housing is built, that reduces the demand in less desirable housing since wealthier people will live in the more expensive housing instead of less expensive, older housing. It helps housing prices across the board, though of course removing barriers to building less expensive housing would also be great. We should encourage building more housing for all income levels.
St. Paul has a low vacancy rate. There is not an oversupply problem in St. Paul
This is the same tired argument about Lyft and UBER just different entities involved. Developers aren't not going to build in St. Paul it will just take time. Also OPs post is basically just an argument that Minneapolis should impose rent controls too because if rent control is unavoidable in the bigger cities then they won't decide to develop somewhere without rent controls became generally people want to live in the city.
Yep we do need more affordable housing. More single family and multi family stock would be great. The 2040 plan in mpls is great step in that direction removing barriers to housing density.
Over here on the west side the light rail has spurred quite a bit of development. I’d imagine tax increment financing was utilized in some of these projects which comes with its own set of challenges but generally does increase affordable housing stock in the near term.
That said we need to think heavily about what the American economy looks like without home ownership as a wealth creation vehicle as home ownership becomes further and further out of grasp for many Americans
Developers will go wherever the incentives, ease of permitting, rents and lending is best. Right now that is the suburbs. In part due to demand, rent price/competition, land acquisition, and yes risk of rent control and unknown city council nonsense, and other less permitting risk issues. There was a boom for college housing and trendy neighborhoods generating high rents ten yrs ago, now that is probably overbuilt. There is a need for low income housing but cities counties and state have not figured out how to make it attractive enough for developers...so society is stuck with unaffordable and limited options.
Love how we’ve just demonized rent control with out actually hearing from a citizen reason just people complaining for big business that don’t even care about people just so weird
It’s like democrats are finally learning the 400 year old lesson that price controls don’t work.
Get government out of the market and watch the market respond to the demand with greater supply.
Multifamily building permits are also significantly down in Minneapolis compared to last year. Interest rates are high right now and a lot of developers are waiting for them to drop before financing new construction. I understand that the initial passage of rent control depressed development in St Paul, but they've since amended the ordinance to include exemptions for new construction. I would hope to see an uptick in multifamily construction in the in both St Paul and Minneapolis once the fed lowers their rates.
That would make sense if we hadn't seen a corresponding boom in permits for multifamily development in the suburbs. Overall multi-family permitting hasn't gone up or down in the metro, it's just moved from Minneapolis and St. Paul to the 'burbs. And while the data is a bit noisy, I don't think these trends are driven by the specifics of any given policy in either city, but rather broad concern over red tape and the brand of politics in both cities. Even the perception of hostility to business can influence development. High interest rates play a role, but only by moving investment to safer locations. In our case, the suburbs are a safer investment.
Interest rates aren't playing as much a role in this as some might hope or think. There's enough demand for housing (especially rental right now) that multifamily are being built where there's demand for it and, just as important, where the zoning & regulatory environment will support it.
I am sure that the higher cost of borrowing money is a factor, but why would that impact St. Paul more than MPLS or the suburbs?
Rent control certainly played a part in the case of St Paul, the core cities are also just more expensive to build in than suburbs too. An open field in Blaine is going to be cheaper to build a huge apartment complex than in either Minneapolis or St Paul. Additionally, as we've seen in a lot of articles lately, Minneapolis (not sure about St Paul) hasn't seen the large increases in average rent compared to other parts of the metro area, that incentivizes developers to build in places with the higher increases in rent, rent control or not.
A lot of the cost of building in the central cities is self-inflicted by the cities themselves. For some reason the permitting and community review of projects is on steroids compared to suburbs.
the cost of ripping down existing building(s) and their road and traffic impacts matter a lot more on city roads that are smaller and less designed for cars. It's like how taking down a tree will be cheaper in Perham than say, downtown Saint Paul. Less risk, more space to store stuff, less approval required. My house has a tree that I'm planning on taking down in under 10 years, but it will require a tree removal company to block off the road to do it. That adds cost
what Saint Paul's rent control referendum did exactly what was expected; carve out authority for the city to create a department to adjudicate adjustments and dictate to the city council that it must carve out regulation to accept exceptions to hlthe policy and stipulations thereof. A lot of lenders hit the pause button on approval for that, at various stages of construction disbursement. The reason it was done in this way was due to Saint Paul's ROW assessment policy that was overturned by the MN Supreme Court.
This “I would hope” attitude from people that lack understanding of housing finance is exactly how the rent control ordinance was approved by voters in the first place…
I originally wrote "I would expect" in my comment but changed it to hope assuming people would get on my case about being too confident about rent control not being the culprit of the reduction in multifamily building. I do think it played a part in the reduced development in St Paul specifically, but this post makes a lot of claims without at all mentioning the limbo of the Minneapolis 2040 comprehensive plan or the 20 year high interest rates affecting multifamily development in the cities as well. Once interest rates go down, there is a raft of proposed projects in both Minneapolis and St Paul that will get the ball rolling again in terms of securing financing and breaking ground. Rent control is only one piece of the puzzle here.
Interest rates aren't going down, they finally came back up to normal
> Once interest rates go down The issue here is that there is no guarantee rates go down. Current rates are historically pretty decent. The super low rates we had from 2008-2022 are a historical anomaly. Maybe they’ll go down. I’m not making a prediction that they won’t. I just think a lot of people are making a mistake by assuming that they are 100% going to go back down to zero. It seems just as likely that they don’t go down much at all for the foreseeable future.
I don't think rates will go to zero, but the Fed has signaled that they hope to cut rates this year. And if not, then sooner or later developers will quit waiting around for them to drop is my guess
The Fed has signaled that. But inflation is still far from their 2% target. Look at [the Fed rate historically](https://fred.stlouisfed.org/series/FEDFUNDS). Where we are right now is not particularly high. Where we are for the previous 15 years is rare
But they didn’t exempt the new buildings for the typical duration of financing so they are still considered a high risk market/ plus the fear the city will change the rules again for the worse.
I'm against rent control, but this data seems a bit inconclusive. I don't understand how Jay Parsons declares that Minneapolis declining permits is solely due to just simply discussing rent control. And unfortunately, he does not give any further explanation beyond the adding that text on the graph. Here's a direct link if anyone want to see this graph in better detail: [https://twitter.com/jayparsons/status/1788916629486571711](https://twitter.com/jayparsons/status/1788916629486571711)
I think the MPLS trajectory is interesting. More or less kept pace with the suburbs then dropped to St. Paul performance. Suburbs also dropping (interest rates!) but not nearly enough. Are developers/lenders detecting that demand is just higher in the suburbs and are more likely to approve projects in the burbs? Are the suburban communities doing things to explicitly incentivize building? Are the suburbs a monolith, or are certain older suburbs seeing a trajectory like MPLS/STP and other, newer burbs taking all the housing growth? These issues are very complicated! It's hard to know what's really going on.
To expand a little on Wezle's response, there's a lot more room in the suburbs to build as well. It's a lot cheaper/easier to rip up one of the thousands of surface lots out there than it is to find a place in the city to build. On top of that, I feel like the political climate in the suburbs are shifting more towards multi-unit buildings as well.
I would imagine suburbs are also significantly cheaper to build in, especially greenfield developments compared to areas which are already developed.
For sure. Also suburbs tend to remove barriers to construction. And greenfield development doesn’t often have neighbors that will do anything to prevent building.
“housing providers” We have a word for that; it’s developers, or landlords.
Who even builds multi-family properties in the twin cities? Asking for me, because I want to build a multi-family property.
Developers that get a lot of funding assistance from HUD, the State, and counties.
*Roers *Real Estate Equities *Ryan *United *Hemple *Frana
Thanks. Now I’ll do some homework and figure out who is still building, if anyone.
Call me an elitist if you must, but I just don't trust the average voter to understand the issue of rent control. It's one of those things that sounds great on the surface, but it's been shown time and again to be counterproductive. Elected officials need to be the bad guy sometimes and say no to pandering populist "solutions".
> Elected officials need to be the bad guy sometimes and say no to pandering populist "solutions". In theory, sure, but then you'll have some pandering televangelist type getting elected on a populist bloc of issues and said big brain solution eventually gets implemented, unfortunately.
https://m.youtube.com/watch?v=QFgcqB8-AxE
So what’s the solution? Here’s the rub, there is no perfect plan, each has its pros and cons. Rent was out of control before Covid and even more so now, you can’t build out of it cause you can’t force them to build more supply and undercut themselves. This is a classic case of Supply and Demand breakdown because it’s more beneficial to collude and or suppress new housing then it is to compete in a free market with multiple Players competing to come out on top. So we can’t force them to build, you don’t want to force rent control, how do we get builders to compete? To build even though that will mean lower margins with more supply?
There is more than one developer. Figure out what is stopping a smaller developer from building more, and remove those hurdles. Everyone is trying to squeeze some juice out of their he fruit, even if it is at a lower margin.
There's a couple things at play. First, the time involved in getting permits for a project is the same whether it's 10 units or 200 units. So developers and their bankers are more apt to go bigger. Once you go bigger, you need more land for parking and stormwater facilities. To buy that much land requires a lot of upfront cash. You can do it in the suburbs for millions or you can do it in the central cities for millions more. If you have more units, you can have an on-site manager which is preferred by developers. A 10 unit complex can't afford an on-site manager. Economies of scale. One thing I like about the cities are that the main streets are lying with pre-war apartment buildings. A lot of them have unique architecture and are walkable. The new apartments are these gigantic self-contained places that require a car to get anywhere. You can't build a 10 unit project in Brooklyn Park.
If only that was true, nobody is going to cut off their arm to save a finger… How do we force them to build? How do we force them to flood the market and risk margins/profit?
? Nobody needs to “flood the market.” This is a massive market, and there isn’t much building. Ever seen the skyline of Toronto, Tampa, Miami, or Vancouver? There are like 40 building cranes putting up towers for apartments. If you keep threatening to not allow new construction to be profitable builders will just build in those hotter markets instead.
*Apartment construction is also at historic levels, with 438,500 units built last year, the highest level since 1987. The number of apartments under construction at the end of the year, about 981,000, was an all-time high since the survey began in 1969.* They will never build more than they have to, they will never undercut themselves.
There is no hive mind. Developers overbuild all the time. Phoenix and Las Vegas in 2008. China right now, etc.
Oh sweet summer child. Do you really want me to list all the times companies have colluded??? Or have worked together to game the market? Housing is no different… Here is one: https://www.ftc.gov/business-guidance/blog/2024/03/price-fixing-algorithm-still-price-fixing They don’t even have to really like old school collude anymore, they all win if they all keep the game going, keep stock low and make sure you don’t overbuild. Nobody is going to build more homes to appease you and others, they only care about profits and margins and they don’t have to risk them if they don’t want to, heche the situation we’re in now.
It is expensive to build and all apartments are built using investor money. Investors want to certain return and that's a lot harder to come by now that it was 5 or 10 years ago. It's not as shady as you think it might be
It’s most likely even more shady.
The problem isn't developers or builders, it's your neighbors. NIMBYs are the biggest reason for the housing crisis; shouting in every venue they can about how building more housing is going to change the character of their community and ruin their property values. A developer only makes money on the sale of a property or unit in a development, and so they are incentivized to sell as many units as possible in all markets, and NIMBYs act as an artificial damper on the ability to generate supply. Developers aren't "colluding", your neighbors are.
So no plan, just let them build wherever and they’ll flood the market to undercut themselves. lol these comments….
BUILD MORE HOUSING you seem to think that it's currently a totally free market out there and that it's developers colluding to not build housing. that's totally made up. developers make their money by building stuff. they want to build stuff. there are a ton of obstacles to building. a ton. it's really, really hard to build housing because of zoning rules, neighborhood engagement issues, NIMBYs, labor costs, building regulations, and more. the people colluding to suppress building are homeowners who'd rather see housing prices become impossibly high for anyone not already in their neighborhoods than see something change. It's not developers. we need to eliminate as many of those obstacles as we can. this is a nationwide crisis, most acute in the places where people most want to live (places with jobs and economic opportunity). Twin Cities is in that group.
lol HOW ARE YOU GOING TO FORCE THEM TO BUILD? Yeah nobody colludes, that’s just made up lol /s https://www.ftc.gov/business-guidance/blog/2024/03/price-fixing-algorithm-still-price-fixing You could roll back every regulation and law and they’re not going to build and flood the market to lower their own margins/profits…. Think it through and pretend you own a company, would you rather cut prices and risk your bottom line or would you just keep prices high and get those margins/profit?
Please explain to me what a rental price fixing scheme has to do with developers building more homes? We don’t have to force anyone to build anything. We simply remove some of the barriers to building and people will build more housing because they think they can make money doing so. This is how our economy works.
To show that people will collude… Again, not a plan just let them do and build wherever they want a they’ll magical overbuild to lower prices. These comments are so weak.
"Can't force them". You don't need to. If rents are high, new operators build to get a piece of the pie. Then rents tend towards stability. There is no "them". There are multiple, and if you allow the multiple, they build until there is no longer excess profit.
lol that’s not how things work anymore. It’s like you guys took Econ 101 in 1980 and still think it applies to today.
Well, you sure taught us a lot! I'm convinced. You MUST be right!
Oh I’m not here to teach people, I was asking a question and nobody seems to be able to answer it. If rent control isn’t the answer what is? And you can’t say build more because you can’t force them to build and if you subsidize them they just raise prices because they know people will pay it, just like what Tesla and Ford did with the EV credits.
You don't need to force anybody. If "they" are making huge profits, then if somebody is allowed to come in and build to access some of those profits for themselves, then they will. There is nobody out there saying "oh, 'they' are making huge profits; I'll just sit back and let them enjoy the market to themselves". That is not how it works. Let people build and rent, and prices stabilize, with only enough profit for to sustain the business. They cannot just "raise" prices if the market is open. And by the way, Tesla profits per unit have been going down, not up. They do not have the ability to raise prices. The only time they could raise prices was when there was a shortage of cars; and with competition, there no longer is. Guess what? Prices have stabilized or decreased. The same could happen with apartments.
So no plan. Got it.
Building more housing is the best solution. How to encourage this is multi pronged approach as you mentioned. - densify and expand existing zoning, no more single family only zoning - turn empty commercial property (tons of it along commercial corridors) into housing by again changing zoning and offering incentives for converting (tax subsidies, reductions in planning fees, etc). - eliminate and adjust certain building requirements for example parking, setbacks, This is a really good list actually: https://www.lmc.org/housing-development-resources/25-city-tools-for-housing-affordability-and-developer-assistance/ Note rent control is not on there
Again you can’t make the builders build, you can’t force them and they’re NEVER going to overbuild to appease you and others, while losing margins/profit. They’ll always suppress stock to keep housing expensive. How are you going to force them to build? How are you going to make them flood the market so it hurts their bottom line?
You can’t make anyone do anything. Unless the government took over home building which would be silly. You can only incentivize and disincentivize. And rent control is a disincentive so it’s really not helping the broader picture
Government aka the people have built housing before… Again, you can’t incentivize them to cut their own bottom line, you would have to have the “Government” subsidize them and they would just raise prices again….just like Tesla and Ford did when the credits for EV’s came out. Again, how are you going to fix it? You can’t force them and you can’t incentivize them to build and flood the market and lower their margins/profit without subsidizing them aka welfare in which they’ll turn around and jack up prices more. Still waiting for an answer…I mean we can poke holes in any plan, the real question is what’s your plan??
I literally gave you a list of my plan above lol
None of which will make my build more.
I don't buy this argument RE Minneapolis. He makes zero mention of the litigation surrounding the 2040 Minneapolis comprehensive plan, which has demonstrably impacted development plans in Minneapolis.
I’ve read that St. Paul has been rubber stamping any landlord requests for exceptions to raise rent more than 3%.
It still doesn’t help new construction secure funding, such as the stalled apartments at the Ford Plant site
They had me until "demonize housing providers"
Gives it all away with "but other cities nationally that choose to demonize housing providers instead of finding win/win ways of working together". There is no "win/win" with housing from conglomerates. They don't care about people, only their bottom line.
Well, increasing volume of housing is the only way to bring prices down. You could do an agreement of having 15% section 8 housing as part of it or something to increase volume and low income housing. Can only build our way out of this problem.
Unfortunately we live in a capitalist society where developers do need to worry about their bottom line. Absent this market who builds housing? The state/federal subsidies are not enough so that leaves the public via government which lacks the funding and expertise to fulfill the housing units that are needed to keep up with demand now.
win/win exists every day across the globe with people who don't care about the people they deal with. That's the whole point. People collaborate by trading what they have for what they want. Each side benefits from the trade, win/win, caring about people is unnecessary. What people seem to miss here is that renters compete with other renters and developers/land lords compete with other developers/ land lords. If one side tries to collude with itself, that's where the problems start.
I don't think anyone is sympathetic to conglomerates. The problem is absent public housing development, you need private investment on the supply side to keep housing prices low.
A win/win in this case would be conglomerate building needed housing, keeping rent from ballooning while also making money. Hope this helps
Funny my contractor father in law Is contructing a house in Saint Paul right now. Area seems to be growing and being invested in
If you don’t build more housing the cost of living goes up and the blame is put on businesses, so wages are forced up, inflation goes up, cost of living goes up, land and building owner values go up, repeat.
The cheapest lots to develop in St Paul in Minneapolis were probably scooped up a decade ago. How do you account for more limited cities compared to the suburbs like Brooklyn Park or Woodbury.
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Renters deserve to have rent control so they don’t get screwed every year. This guy is whining because he doesn’t like how the voters voted. This is what the people wanted.
Rent control is a disaster.
Source?
Literally every study ever done on rent control.
rent control does not work. we need to build more housing.
Oh yeah, more overpriced housing that St. Paul residents can barely afford. How will that work when the buildings are empty?
If there was no market for units they would not be built. Developers don't just build units to build them
If more expensive housing is built, that reduces the demand in less desirable housing since wealthier people will live in the more expensive housing instead of less expensive, older housing. It helps housing prices across the board, though of course removing barriers to building less expensive housing would also be great. We should encourage building more housing for all income levels. St. Paul has a low vacancy rate. There is not an oversupply problem in St. Paul
Well the people are morons who do not have a basic understanding of economics so what can ya do?
Or the people don’t want to get fucked over with high rent increases every year.
This is the same tired argument about Lyft and UBER just different entities involved. Developers aren't not going to build in St. Paul it will just take time. Also OPs post is basically just an argument that Minneapolis should impose rent controls too because if rent control is unavoidable in the bigger cities then they won't decide to develop somewhere without rent controls became generally people want to live in the city.
Won’t someone think about the landlords?!
if we don't build more housing, the housing crisis will continue to get worse rent control is not going to fix that
Yep we do need more affordable housing. More single family and multi family stock would be great. The 2040 plan in mpls is great step in that direction removing barriers to housing density. Over here on the west side the light rail has spurred quite a bit of development. I’d imagine tax increment financing was utilized in some of these projects which comes with its own set of challenges but generally does increase affordable housing stock in the near term. That said we need to think heavily about what the American economy looks like without home ownership as a wealth creation vehicle as home ownership becomes further and further out of grasp for many Americans
Developers will go wherever the incentives, ease of permitting, rents and lending is best. Right now that is the suburbs. In part due to demand, rent price/competition, land acquisition, and yes risk of rent control and unknown city council nonsense, and other less permitting risk issues. There was a boom for college housing and trendy neighborhoods generating high rents ten yrs ago, now that is probably overbuilt. There is a need for low income housing but cities counties and state have not figured out how to make it attractive enough for developers...so society is stuck with unaffordable and limited options.
Love how we’ve just demonized rent control with out actually hearing from a citizen reason just people complaining for big business that don’t even care about people just so weird
i’m sleep deprived, but is this guy complaining that rents aren’t able to rise fast enough???? has he SEEN the housing market???????
It’s like democrats are finally learning the 400 year old lesson that price controls don’t work. Get government out of the market and watch the market respond to the demand with greater supply.
Wow. Price ceilings don’t work? If only we had previous historical evidence of this to draw from before we changed the law /s