Renter households across the state struggle to pay the rent and make ends meet, according to a new study produced by the Minnesota Housing Partnership (MHP), in partnership with the National Low Income Housing Coalition.
Building on the annual report produced by the National Low Income Housing Coalition, Out of Reach Minnesota 2019 delves into state, county and local trends to reveal that “households in every corner of Minnesota are spending thousands of dollars more than they can afford each year just to pay the rent for a modest apartment.” The high cost of rental housing affects a growing number of Minnesotans throughout the state, including residents of Itasca County.
According to the report, the number of renter households in Minnesota continues to grow, having increased by 1,500 households in just a little over one year. From 2000 to 2017, the state gained more than 128,800 renter households, and the percentage of Minnesotans that are renters rose by 12%. In Itasca County, said Diane Larson, Executive Director, Itasca County Housing and Redevelopment Authority (HRA), said 20% of the households are renters - nearly 3,800 households.
Adjusting for inflation, Minnesota’s housing wage, which represents what Minnesota workers need to earn to afford rent without paying more than 30% of their income on housing, has increased over the past decade, putting rent out of reach for more and more Minnesotans, the report concluded.
In 2009, the housing wage for a modest two-bedroom apartment in Minnesota was $15.12. In 2019, the wage has risen 30% to $19.74. Even adjusted for inflation, that’s an increase of 9.3%. In Itasca County, the change in housing wage over the last decade is between 6 and 10%.
This increase is similar to nearby Cass, Beltrami and Lake of the Woods counties, which also experienced a 6-10% change, but larger than neighboring Koochiching County (1-5% change) and Aitkin County (-3-0% change). The Duluth metro area trails just after Grand Forks as the county with the steepest increase in the housing wage, with an 18% increase over the past 10 years.
Meanwhile, as housing costs have climbed, stated the report, median renter income across the state declined by at least 5% from 2000 to 2017, a trend which is also present in Itasca County, explained Larson.
“Not unlike the state, rent and home values continue to rise while incomes decline or remain stagnant, putting a modest apartment or homeownership out of reach. In Itasca County, median rents have increased 14% since 2000 while median incomes have decreased by 9%,” Larson explained.
Today, simply put, renter households often just don’t earn enough to pay the rent and make ends meet. In 2019, a Minnesotan would need to earn an annual income of $41,061 to afford a modest two-bedroom apartment, the report concluded. Yet, the median renter in Minnesota earns approximately $38,089.
“The average wage ($15.53) for a renter in Minnesota isn’t enough to afford a modest two-bedroom apartment in any Minnesota county,” the report explained, adding that this wage is enough to afford a one-bedroom apartment in only 24 Minnesota counties (less than one quarter of all counties in the state).
Statewide, the report continued, the average Minnesota renter would have to pay $2,628 more than they can afford each year for a modest two-bedroom apartment. For individuals earning the state minimum wage ($9.86), even a one-bedroom apartment is out of reach in all Minnesota counties. To be able to afford a one-bedroom apartment, a minimum wage worker must work 63 hours per week. A two-bedroom would be even further out of reach, requiring 80 hours per week.
“In the housing world, we define cost burden as when housing costs require more than 30% of a household’s income each month. Severely cost burdened is when housing costs require more than 50% of a household’s income each month,” Larson explained. “In Itasca County, we have over 1,600 cost burdened renter households and 730 severely cost burdened renter households.”
The cost burden increases dramatically when you look at households making less than $20,000 per year, Larson continued.
And there doesn’t seem to be any relief coming for renters from their booming industries.
According to the report, even occupations which are projected to experience the most growth do not pay enough for their full-time employees to afford two-bedroom rent in most counties, and six of the top 10 jobs in the state pay less than is needed to afford even a one-bedroom apartment.
“I think it is fair to say that we value our tourism industry and health care industry in Itasca County,” said Larson. “These two sectors have some of the fastest growing in-demand jobs. However, the wages for many of these positions (home health aide, retail sales, etc.) do not equate to housing affordability. It is estimated that an annual salary of $30,680 is needed to afford a two-bedroom apartment in the county.”
While the growing gap between wages and rent affects a growing number of Minnesotans, it has a disproportionate impact on communities of color, stated the report. While only 24% of white households are renters, 60% of households of color are renters. Statewide, the median wages earned by Black and Native American workers are barely half that of white and Asian workers.
Today, Minnesota maintains its status as the 22nd most expensive state in the nation. The wage required to afford a modest two-bedroom apartment in Minnesota is more expensive than 29 other states, including $2.97 higher than Wisconsin, and $4.30 higher than Iowa.
“When families pay too much for rent, they are forced to sacrifice to make ends meet - cutting back at the grocery store or delaying a trip to the doctor,” said Larson. That’s exactly why a team has begun looking at the issue as it affects local communities.
According to Larson, the Itasca County HRA and Northland Counseling Center recently teamed up to work with communities across the county to conduct a thorough housing needs analysis. The communities of Bigfork, Cohasset, Grand Rapids and Nashwauk are all participating. Community Partners Research, Inc. has been hired to conduct the housing study and work is underway.
“We anticipate the studies will be completed in September with public meetings to be held in early October to present the research and recommendations for housing,” explained Larson.
Recommendations will look at all types of housing, including rental, for sale, lot development, rehabilitation needs and other housing issues.
“If Minnesotans cannot afford the rent, local communities suffer,” said Anne Mavity, Executive Director of the Minnesota Housing Partnership. “Out of Reach 2019 shows that trends continue to worsen for renters across the state. Our businesses need housing that’s affordable to workers to ensure a growing and thriving local economy. We need elected leaders at every level to be laser-focused on preserving existing affordable housing and creating new, affordable places for Minnesota’s workers and families to live.”