Report: Homeownership out of reach for many people of color in Minneapolis

In a new report from the Minneapolis Homes program, all homes in the city are currently out of reach for the average Black and brown Minneapolis resident, and if trends continue, by 2040 all homes will be out of reach for the average resident of any race.

During a presentation given to the city’s Business, Housing & Zoning Committee on Tuesday, Minneapolis’ Residential and Real Estate Development Manager Roxanne Young Kimball said that despite making progress to help Black, Indigenous and other people of color in Minneapolis, the cost of homeownership continues to rise and price out many would-be homeowners.

The most affordable areas of the city, between 2016 and 2020, were the Near North and Camden neighborhoods, while the most expensive areas are Calhoun-Isle and Southwest, according to the presentation.

Coming out of the foreclosure crisis from 2008, the city shifted much of its focus to recovery: ensuring homes were just built in the city at all. Since 2021, Young Kimball said, the city shifted its focus to producing units that were available for a certain area median income threshold.

Young Kimball said during the presentation most Black and brown renters cannot afford market rate units and the focus on what was being developed had to shift.

“One of the things that really shifted the narrative for how we address homeownership in the city of Minneapolis: 70% of BIPOC renters in our city have incomes below 50% AMI and practically no homes are available on the market at this income level,” she said.

And the city has made progress, according to the presentation. Out of 455 households receiving financial assistance from the city, 67% were homebuyers of color and the average income of all households served was at $45,000, or 40% AMI for 2022.

The price of the median home in Minneapolis is expected to move from its current $320,000 to $465,455 in 2040, according to the presentation. In Near North, the most affordable area, the median price is expected to move from $225,000 to $404,353. While Southwest, the most expensive with a median price at $481,300, will reach $681,323.

“In 2024, just about all neighborhoods are out of reach for Black households,” Young Kimball said. “If the trend represented on this chart continues, by 2040, a majority of all homes will be out of reach for all Minneapolis residents.”

Young Kimball said there are various policy pathways that the City Council could pursue around affordability depending on their goal. If the goal is to eliminate racial disparities in homeownership, the council will need to deeply subsidize homeownership for Black and brown residents and fund programs that do so with a larger budget.

If the council prioritizes assisting BIPOC developers, they could also eliminate civil rights or prevailing wage requirements for 17-unit infill developments, according to the presentation.

Council Member Katie Cashman asked Young Kimball why condo ownership was so difficult to create in the city, particularly downtown. Young Kimball said there are concerns about insurance and warranty law at the state level.

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