In February, the Minneapolis City Council voted to reject an appeal by the East Calhoun Community Organization (ECCO), allowing over 300 new homes to be built at the Sons of Norway site on Lake Street. The location is in the “Heart of Uptown”, one of the most transit-rich and walkable communities in Minnesota. There are multiple grocery stores nearby, as well as restaurants, bars, parks, the Chain of Lakes, Midtown Greenway, and other desirable amenities.
The appeal focused on issues that arise with nearly every multi-family housing proposal: concerns around traffic, parking, and height. The phrase “density bomb” may have been used. Many of the homeowners who testified expressed concern this project would make the neighborhood less affordable. Based on my personal impression of this neighborhood as an already expensive place to live, concerns that this plan would make things worse struck me as particularly misplaced. So I had to question my initial impression: is this well-to-do neighborhood at risk of gentrification from the construction of new housing?
The estimated monthly rent for the smallest homes in this building will start at $1,200. That sounds like quite a bit of money, but perhaps not outside the range you’d expect for a prime location. To get a sense how affordable the neighborhood currently is, I started looking at ECCO’s housing options from the perspective of an aspiring new resident. The official neighborhood boundaries are Lake Street to the North and 36th Street to the South, as well as Hennepin Avenue to the East and Bde Maka Ska to the West.
Geographically, the neighborhood is zoned almost entirely for single-family homes and duplexes, with apartment buildings largely confined to Hennepin and Lake Street. But the zoning doesn’t perfectly match the built reality: there are a good number of legally non-conforming triplexes and apartment buildings within the neighborhood interior, built before the neighborhood was downzoned, which provide the neighborhood with some of its most inexpensive/affordable housing. The current low-density zoning means housing options are limited, but I’ve been able to find good deals in other sought-after neighborhoods, so how hard could it be?
I started by looking for homes for sale; I’ve heard in fables that the path to the American Dream is paved with mortgage interest tax deductions. After some searching on Zillow, the cheapest listing I found was for a 2BR condo unit on Hennepin Avenue, listed at $180,000. With just five percent down (that’s “just” $9,000) and assuming a four percent interest rate, my monthly payment would be a little over $1,400 including the $195/mo association fee. Not bad!
The problem: this listing had been on the market for a week, so when I looked into it further, the seller had already accepted an offer.
The next cheapest listing for sale was going for $449,000, and it’s another two-bedroom unit at that, so I could get a roommate to help with the cost. I excitedly called my loan agent but never heard back, so I ran the numbers myself. With a five percent down payment ($22,450 this time!), my monthly mortgage payment was going to be somewhere around $2,900. Add the association fee of $1,600/mo and we’re looking at a total monthly payment of $4,500. Yikes!
The cheapest single-family home I found in the neighborhood was asking for $495,000, and just a block from Lake Street. It looked pretty dumpy from the outside and there weren’t any pictures of the basement (a very minor red flag according to Real Estate Professionals), but with five percent down I’d be paying about $3,500 per month.
I’d still need a couple of roommates to help with that plus the heating bill and other utilities. A new roof or furnace would probably be a $10,000 setback, but I’d be close enough to Uptown to busk for a few hours a day to cover it.
I scoured a few blocks using Hennepin County’s property lookup tool, hoping to find some dilapidated gem, and was able to find just one home for under $300,000. Unfortunately, the owner has been living there since the Reagan Administration so is probably not too keen on selling. Median home prices on a few individual blocks I searched ran from $475,000 up to almost $600,000.
With my hopes of owning a single-family home in ECCO dashed, I decided that renting was probably the more affordable option, with no unexpected big-ticket repairs and a lower monthly payment. I used Padmapper, which puts rental listings from Craigslist and other places on a convenient map. I quickly found 11 options available for rent in ECCO, but the cheapest was $1,295/mo, about $100 per month more than the brand-new apartments proposed at the Sons of Norway site. Median rent for the neighborhood was estimated at $1,099 per month in 2016.
If the Sons of Norway apartments were opened to new tenants tomorrow, they would be among the least expensive homes in this neighborhood.
The lack of housing choice is not unique to the ECCO neighborhood. Existing zoning laws actively work to restrict housing options. It should not require a half-million dollar mortgage or an out-of-reach monthly rent to live in a walkable, transit-friendly neighborhood.
When we talk about housing choice, we should also remember that many residents want to stay where they are. Single-family homes should not be the only options for those who want to live in this neighborhood; not only is it unaffordable for many, it’s impractical for existing single-family homeowners who’d like to downsize while remaining close to friends and amenities.
Building new homes in desirable neighborhoods is critical to creating new housing without displacing existing residents. Creating more housing choice allows more residents to actually live in amenity-rich places. Our city is better when we ensure that housing is abundant in these neighborhoods, rather than an increasingly more expensive and exclusive commodity.
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