Archive Hosted by the AFL-CIO

Tuesday Talk: Q & A on MN’s Uneven Housing Recovery

January 21, 2014 By Joe Sheeran, Communications Director

Minnesota 2020 and Minnesota Housing Partnership (MHP) have teamed up to explore and examine the housing recovery. What has it meant for owners and renters in Minnesota? Over the next several months, we'll release our findings in a series of articles, blogs, interactive maps, videos and online discussions.

Minnesota is experiencing an uneven recovery. In the select communities we studied, pockets of North Minneapolis and St. Paul's Eastside and Frogtown have lost nearly 60 percent of their median home values since peak prices in 2005. Examined suburban and exurban communities have lost 30-40 percent of their median value. Greater Minnesota losses vary depending on location, their communities' main industries and other factors.

Foreclosures and the home construction collapse have also led to a squeeze in the rental market, making a suitable place to live unaffordable for more low-income renters, the elderly and people with disabilities.

Today, from 8-9:30, we're kicking off the first of our discussions with Leigh Rosenberg and Chip Halbach from MHP and our Lee Egerstrom.

What's been your experience since the collapse of the market, whether you are an owner or a renter?

What policies do we need to shore up housing affordability, especially for renters, without devaluing owner occupied housing?


Post your comments or questions in the box below, scroll down to see the ongoing conversation, and use "refresh" to see new comments.

Thanks for participating! Commenting on this conversation is now closed.


  • Rachel says:

    January 21, 2014 at 8:44 am

    Good morning! Lee, Leigh, and Chip will all be joining us shortly. In the meantime, we’d love to hear about your experiences. How has your area of the state fared?

  • Lee Egerstrom says:

    January 21, 2014 at 9:07 am

    It is a cold morning in Minnesota. For many of us, the weather is just one more problem with affordable, available, safe and energy efficient housing. Welcome, everyone, and please share some warm thoughts on the housing crisis.

    • Chip Halbach says:

      January 21, 2014 at 9:15 am

      And cold mornings are also a reminder of the need for safe shelter. This winter shelters and the extreme cold have contributed to an overflow at Minnesota shelters. The 2014 legislature will hear requests for both affordable housing funding and funding for shelters.

  • Leigh Rosenberg says:

    January 21, 2014 at 9:14 am

    Good to be here at MN2020 to talk housing since the foreclosure crisis. I have the honor being a researcher with the Minnesota Housing Partnership.

    We’ve definitely seen a lot of changes in the housing markets over the last few years. Home prices have plummeted (and recovered a bit) since peaking sky high in 2005-6. And there’s also been a massive shift towards rental housing as former owners who lost houses became renters.

    I’ve been thinking a lot about what this shift means for all of us, especially low income people.

    • Lee Egerstrom says:

      January 21, 2014 at 9:20 am

      Please expand on this, Leigh. A lot of public commentary implies that a housing “recovery” will come when home prices return to their peaks. Actually, a recovery is when home prices start to regain strength from lows. Rental property, meanwhile, isn’t recovering from anything except exaggerated demand that you reference above.

      • Leigh Rosenberg says:

        January 21, 2014 at 9:26 am

        Interesting comment, Lee. Yes, how we define “recovery” seems really important. The impact has been different for owners vs. renters.

        I was fortunate to buy a house about 3 years ago, when prices and mortgage rates were low. For new buyers entering the market, it has been a great time to buy.

        But at the same time, it’s hard to say much positive about the “recovery” for low income renters. We know that homelessness, at least among families in Hennepin County has been rising and rising. This is in part due to rising rental costs, amidst super low vacancy rates over the last few years.

        We could also take the perspective of owners who’ve been in their homes a while, or higher income renters, or landlords. Each has a story about what the recovery has meant.

  • Joe says:

    January 21, 2014 at 9:18 am

    For a more detailed overview on Minnesota’s foreclosure crisis, read the introduction article to this series

  • John Van Hecke says:

    January 21, 2014 at 9:19 am

    What tools do affordable housing providers have to address this problem? Are they adequate to meet growing need?

    • Chip Halbach says:

      January 21, 2014 at 9:37 am

      There are a variety of tools for providers who are developers. This opens up a big topic because there are also tools for communities to directly assist renters, and other tools, like foreclosure protections for renters, that help keep people in their homes. While tools for developers are made available at federal, state, and local governments, they also come through the private market. The most significant developer tool for rental housing is the federal low income housing tax credit. By the federal government making tax credits available (via state intermediaries), corporations are encouraged to provide financial equity for affordable rental housing. The credits are so significant that they can bring in investments covering 60% of the costs of an affordable housing development. This is one reason housing advocates are closely looking at Congressional tax reform proposals. Some of those being talked about would totally eliminate the housing tax credit.

    • Lee Egerstrom says:

      January 21, 2014 at 9:37 am

      Chip offers a good explanation of the mortgage interest deduction policy goal, below. Add to that the $100 million in bonding authority for housing programs that MHP and other housing organizations and agencies are promoting. All will help, in time, but not overnight. That adds to urgency to get things done in Minnesota Legislature and Congress this year.

    • Jen says:

      January 21, 2014 at 9:40 am

      Getting into neighborhoods seems to be a perennial challenge for affordable housing developers because of NIMBY-ism. Minnesota could use a stronger set of incentives, such as offering fixed property tax rates to neighborhoods that have a threshold of affordable housing; or maybe neighborhoods that have “accepted” an affordable housing development in the past 5 years can keep their rates fixed for 5 years?  Not sure of the cost/benefit on this, but would love others to weigh in.

      • Chip Halbach says:

        January 21, 2014 at 10:01 am

        There are many approaches to NIMBY concerns. (And a caveat, some NIMBY push back is healthy… it represents people standing up for their neighborhoods and can lead through negotiations to better development.) A lot of NIMBY objection to affordable housing is rooted, however, in lack of understanding of both the people who need the housing and of the quality of the housing itself. Peoples impressions were based on some mistakes made in housing development long ago; others are concerned about change to their community. In either case much of the fear can be addressed by public education—showing neighbors examples of well built and managed affordable housing and identifying the types of people, and their occupations or life situation, that are likely to live in the housing. Beyond public education, there are many incentives that the Met Council and state government can offer communities creating affordable housing (and disincentives for those that resist it) as well as local government actions.

  • Kirsten says:

    January 21, 2014 at 9:25 am

    Does the foreclosure crisis look different in rural, urban, and suburban areas?  Racial differences?  Families versus singles?

    • Leigh Rosenberg says:

      January 21, 2014 at 9:36 am

      Great question, Kirsten. We know the crisis has played out very differently across the state and for different demographics. However, even as people who follow housing closely, we at Minnesota Housing Partnership wanted to understand better the texture on the ground in different locations. It’s really easy to be aware of how things look in one neck of the woods based on where we live or work. And we can look at data and numbers, which is important. But we really have to do some homework to get a deeper picture. That’s one of the big reasons we were excited about this project to team up with MN2020 and explore the crisis more deeply. We’ll be learning as we go, too, through the stories, videos, and articles that will run with this series.

      But if you have a more specific question, we’d be happy to try to answer it.

  • Chip Halbach says:

    January 21, 2014 at 9:26 am

    One of the federal policy initiatives we are supporting is the restructuring of the mortgage interest deduction to free up funds for affordable housing. The deduction of mortgage interest would be converted to a 15% tax credit on mortgage interest paid (for mortgages up to $500,000). This in turn would create a fund to build/rehab housing for low income renters. And, home purchasers who do not itemize for their tax returns would also benefit. However, some in real estate industry say that this change would hurt the still fragile housing market. What do you think, is the mortgage interest deduction critical to you in your home purchase, or for people you know?

    • Liz says:

      January 21, 2014 at 9:28 am

      I am a homeowner with a mortgage who doesn’t itemize, so the mortgage interest deduction doesn’t help me.  I support the tax credit idea!  How can we get this done?

      • Chip Halbach says:

        January 21, 2014 at 9:48 am

        Thanks for asking! The National Low Income Housing Coalition is leading a campaign, United for Homes, that is advocating such a conversion of the mortgage interest deduction. More on this campaign at or our website Minnesota’s own Rep. Keith Ellison has introduced the Common Sense Housing Investment Act (HR 1213) that also takes this approach. Minnesotans can let Rep. Ellison know that they support his bill. You can also contact other members of our House delegation asking that they co-sponsor Ellison’s legislation, or encourage our Senators to introduce this bill in their chamber.

  • Bernice Vetsch says:

    January 21, 2014 at 9:35 am

    I was extremely fortunate in that I bought my condo in late 1996, before the real estate bubble that burst in 2007.  The price and interest rate were low enough that I was able to pay off the mortgage in 2007, 20 years early.

    It may not be all bad that prices in neighborhoods like Frogtown have decreased since 2005, since that was one of the years in which the bubble was building.  The people who have been hurt are those who bought when their properties were artificially high priced.  Many ended up owing much more after 2007 than their property was now considered “worth;” many have lost their homes to foreclosure.  I think it would be fair to force banks to renegotiate every purchase contract from that period to at least reflect today’s interest rates. 

    Minnesota should, if it has not already, reinvigorate the tax rebate for lower-income renters and owners that reduced their property tax rate by refunding a good portion of what they had paid.

  • Colleen O'Connor Toberman says:

    January 21, 2014 at 9:38 am

    I hear a lot of talk about all of the vacant homes that the foreclosure crisis has left behind in some communities. People can’t seem to understand how we have a shortage of rental units and affordable housing when we have tons of homes with no one in them. What’s your take on what we should do with those homes? How can we turn them back into safe, adequate, occupied housing in a way that’s healthy for those communities?

    • Leigh Rosenberg says:

      January 21, 2014 at 9:51 am

      Colleen, you raise a really good point about the communities where there are lots of homes with no one living in them.

      Part of the issue is that these unoccupied homes are the way they are for different reasons. Some are investor owned. Some are owned by banks that are not acting on their inventory. Local governments in several communities across the country have been working to acquire those properties to put them back into productive use, like affordable rental housing.

      This is one reason that the bonding bill in the upcoming 2014 legislature will be so important. One of the proposed uses of bonding dollars can be to aid in foreclosure recovery.

  • Joe says:

    January 21, 2014 at 9:41 am

    Lee Egerstrom, will you give our readers a preview of other articles in this series. What topics will we explore?

    • Lee Egerstrom says:

      January 21, 2014 at 9:52 am

      Sure, Joe. We’re working on an article and maps / graphics looking at some specific neighborhoods in North Minneapolis and adjacent areas of first ring suburbs. We are doing the same for the East Side of St. Paul and first ring suburbs in the East Metro area. Then, we’re moving out to some extremely hard hit areas in exurbia where homeowners were often distant commuters to jobs in the Twin Cities and St. Cloud. Following that we’ll look at some rural areas. But as been noted by Leigh, this is a work in progress so we are learning on the fly. Yes, there are common underlying problems with the housing bubble and the Great Recession that are common in all 87 Minnesota counties. But the impacts are different from neighborhood to neighborhood, county to county.

  • Susan Greer says:

    January 21, 2014 at 9:42 am

    I am a renter but I have seen the rise of unaffordable rents and the lack of affordable housing.  It’s no longer affordable to rent in the Twin Cities.  The continued growth of luxury apartments when nobody can get jobs that pay a decent income?  Who lives in them? (The only 30 year olds with jobs that like living in the city now?) I can’t believe people want to pay in the thousands per month to live next to the light rail.  What’s the draw? 

    • Chip Halbach says:

      January 21, 2014 at 10:17 am

      First, as a long time supporter of housing alternatives to single family homes and more compact urban development, I endorse the increase in rental housing of all types. This housing increases the city tax base (spreads out the cost of schools and city services) and provides a market for transit options, meaning less dependence on cars. These higher cost rentals apparently make sense to downsizing boomer households, young professionals that either like the lifestyle or need to retain the mobility that renting brings, or others who have good incomes but their credit was hurt due to foreclosure. But, this demand by higher income people for rental housing is also putting a squeeze on lower income households. Further, more jobs are created at the low end than are high paying, meaning demand for low cost rentals will persist. It is therefore very important to keep the pressure on politicians so that funding is directed to preserving or creating affordable housing. Also, a report was recently issued “The Space Between” for the Twin Cities that offers ideas for low cost incentives to owners of lower-market rentals to keep up the quality (where it exists) and hold down costs.

  • Kirsten says:

    January 21, 2014 at 9:43 am

    I heard the Governor put funds in the bonding bill for housing.  Will that help with the housing crisis?

  • Darielle says:

    January 21, 2014 at 9:44 am

    With the legislative session approaching, how can the state legislature work to improve the housing options of Minnesotans?

    • Leigh Rosenberg says:

      January 21, 2014 at 10:04 am

      Darielle, Kirsten,

      So glad you asked about bonding for housing. Bonding would certainly be an enormous step in the right direction, since funds to build and rehab affordable housing are not easy to come by. Governor Dayton’s bonding proposal, as well as the proposal by the Homes for All coalition that many housing and homelessness organizations are supporting (including MHP), would do the following:
      - Build and rehab supportive housing (this combines support services with housing to help people who’ve experienced homelessness access what they need to remain housed successfully- a win win for everyone)
      - Preserve federally assisted housing (such as Project Based Section 8, Public Housing, and Rural Development properties. So many need serious repairs to remain viable over the long term.)
      - To stabilize communities impacted by foreclosure. This could mean land trusts or affordable rental, for example.

      You can find the Homes for All legislative agenda and other related info at Our alliance will be pushing for $100 million in bonding for housing. It feels important to really invest in housing when there’s such a tremendous need out there. Interest rates are also pretty low, so bonding dollars go further now than they would if rates were higher.

  • Maura Schnorbach says:

    January 21, 2014 at 10:06 am

    Good morning,

    I work in the Social Justice Office at St. Patrick’s in Edina. Almost every week I receive requests from individuals who are seeking rent support. Our church has a small fund to assist members of our parish and nonmembers too. What I have discovered is that there are few resources to assist people before they are evicted. Before Christmas I used up all of the funds for the year due to the large number of requests.

    I have reached out to the City of Edina. They do not have any funds. Some of the requests are from people in our community, but most are not. Does anyone know of a fund or funds that I can refer people to who are in this situation? I have referred people to VEAP, Hennepin County, Catholic Charities, Caring & Sharing Hands and the Salvation Army.

    Thank you!

    Maura Schnorbach

    • Chip Halbach says:

      January 21, 2014 at 10:24 am

      Thanks for your efforts Maura! Unfortunately rent subsidy or emergency rental assistance funds are inadequate to the demand. When the legislature next looks at a budget, encourage funding for the Family Homeless Prevention and Assistance Program. In the meantime contact the office Heading Home Hennepin and ask about any available funds. Sometimes shelters also have rent assistance programs.

  • John Vinje says:

    January 21, 2014 at 10:09 am

    These kinds of discussions always seem to “assume”  that foreclosures only happened in certain areas of the greater Metro area - such is not the case.  Some areas of Greater MN have been devastated by the mostly fraudulent foreclosures of the last few years.  Yet, there were also plenty of foreclosures in areas of the Metro that seemed most unlikely:  Bloomington, Minnetonka, North Oaks, Apple Valley, etc. 

    “Recovery” ?  Certainly - if you’ve never been a home buyer before or never had a foreclosure or always had a spotless rental record.

    Yet, at the same time, AFFORDABLE rental units were very hard to find;  now with the new cuts the Sect. 8, many more people will be forced out onto the streets.

    MN definitely needs to do something to create more AFFORDABLE housing, especially for those folks - like myself - who have experienced a foreclosure.

    • Leigh Rosenberg says:

      January 21, 2014 at 10:30 am

      John, really sorry to hear about having gone through a foreclosure. Goodness knows you have not been alone. But I imagine it has not been easy.

      You are so right that foreclosures have not just been a problem in the metro. Some of the hardest hit counties as measured by foreclosure rate (as you can see in the map Joe linked to) are Mille Lacs and Isanti counties. And it’s true that suburbs have hardly been immune. That is part of why this project feels important.

      I share your concern about affordable rental housing coupled with the federal cuts we’ve seen to Section 8 and other programs. This underscores the importance of bonding at the state level, and ensuring a decent budget allocation at the federal level for housing programs.

      One of the tricky things that I think is important to highlight is that creating (and maintaining) affordable rental housing often requires public investment. It’s not really possible to build decent, safe apartments and expect rent levels affordable to low income Minnesotans to support rental properties sufficiently over time. In my opinion, investment by the public in good rental housing makes sense. If our kids have a stable place to live, that’s not full of lead or mold, that is affordable enough so that parents can buy enough food too, kids will actually be able to focus on school, for example. This kind of investment is tremendous over time, in terms of human potential. Not to mention in terms of lower health care costs, a stronger workforce, etc.

  • Steve Fletcher says:

    January 21, 2014 at 10:09 am

    Many activists locally are watching Richmond, California’s example and wondering what role eminent domain might play both in preventing avoidable foreclosures, and in pressuring banks to do something productive with vacant properties they’re sitting on.  What do you all think about eminent domain as a tactic in the quest for affordable housing?

    • John Vinje says:

      January 21, 2014 at 10:18 am

      Steve:  I think its a great idea, and Richmond isn’t the only one looking at it.  I think it would put pressure on banks to find various ways to stop unnecessary foreclosures and at the same time, give them a positive way to do something with the thousands of vacant homes that they are “sitting on” in MN.

      • Chip Halbach says:

        January 21, 2014 at 10:34 am

        While the numbers of foreclosures is subsiding here due to regulatory reforms, tighter lending standards and the overall economic recovery, the Richmond effort is important. We need to see whether the constitutional objections, federal law preemptions and other issues being raised hold water. Also, should this approach be legal it will be good to monitor the cost-benefit for the city, and the costs involved. While it might not be the time to do this now in Minnesota, the rush of foreclosures might return so it will be valuable to see how this approach plays out.

  • Jay Pearson says:

    January 21, 2014 at 10:19 am

    In last weeks Star Tribune, it stated that the Wilder Foundation said that on any given night in Minnesota there are more than 10,000 Minnesotans were homeless. With 400 youth without permanent housing on any given night - just in Minneapolis.
    Another article about the luxury-deluxe apartment/condo building boom currently underway, is projected to continue
    until 2017. (Then, perhaps, a surplus of rental housing may weaken the market.)
    Meanwhile with vacancies almost nil at about a 2% vacancy rate. It’s a property owner’s market. Enabling them to charge rent to what the market will bear.

  • Lee Egerstrom says:

    January 21, 2014 at 10:30 am

    All - The discussions here today remind me of a popular expression in modern Scandinavia: “There’s no bad weather, just bad clothing.” I think we can paraphrase that to fit our problems in Minnesota: “There is no bad weather, just inadequate housing.”

  • Leigh Rosenberg says:

    January 21, 2014 at 10:41 am

    Chip and I agree it’s been great to be part of this conversation this morning. We’ll both be checking back in throughout the day and will respond when we can. Do let us know your experience and your opinions about housing and what we should do in the wake of the foreclosure crisis.