Small houses from the 1940s in Seward

Starter Homes Are Dead, Long Live Starter Homes

As you may have heard, the Minneapolis draft comprehensive plan includes a proposal to lift the ban on small (2-3 story) multifamily buildings in most of the city, and to allow new fourplexes in all residential areas. Council Members Cam Gordon and Andrew Johnson have said they worry these policies will cause the destruction of starter homes and make life harder for young families. As a member of a young family, I think these concerns are misplaced. Zoning that prohibits multifamily housing doesn’t always protect cheap single-family homes, and zoning that permits multifamily housing doesn’t always endanger cheap single-family homes. Finally, while starter homes were important step for previous generations, they’ve mostly disappeared from the city by now. Single-family homeownership is a far less accessible path to prosperity than it used to be, and we need the additional housing options the draft comp plan would allow.

What even is a starter home?

Small houses from the 1940s in Seward

Starter homes of yore (These homes have each appreciated at least $50,000 over the last five years)

According to legend, starter homes are small, cheap detached dwellings that a young family will buy, maybe put in some “sweat equity,” and sell at a profit to move into a larger, more expensive house. It’s worth pointing out the problematic assumptions contained in the concept: that rental dwellings are not legitimate homes (how could it be a starter home if it weren’t the first?), that nuclear hetero families should be at the center of our housing policy, that we’re all destined for big, expensive houses like they have in the suburbs, and that the constant inflation of home prices is a good or sustainable thing.

Why do we care about starter homes?

Starter homes played an important role for previous generations in securing housing and building wealth, but homes have gotten more expensive, and ownership has become less popular among young households. In 1990, more than half of the owner-occupied homes in Minneapolis cost less than $75,000, (just under $150,000 in today’s dollars), and about 40% of young households (18-34 years old) owned a home. The latest Census estimates show that less than a quarter of owner-occupied homes cost less than $150,000, and less than 30% of young households own a home.

Bar chart showing that homes were cheaper in 1990 than in 2016

One of the reasons starter homes are out of reach for today’s young folks is that they were so successful in building wealth for the previous generation. When home values increase, that is good for people who own the homes and bad for people who want to buy them. It’s also bad for people who rent, because rental and owner-occupied housing prices generally move in the same directions for the same reasons. Daniel Hertz has noted and explored in detail the contradiction between housing as a good investment and housing as an affordable necessity.

Low-density zoning doesn’t protect modest homes

Map showing a lot of teardowns in southwest Minneapolis
Maybe you’ve heard of the recent teardowns in southwest Minneapolis. This map shows new constructions in low-density zoning districts in just the last five years. On each of these parcels, a large, expensive house replaced a smaller, cheaper house. In at least one instance, the large, expensive house replaced two cheaper homes:

It’s perverse that our zoning code makes it illegal to replace this duplex with a new duplex. We’d have more space for everyone who wants to live in the city, and in southwest specifically, if some of these teardowns had been for townhouses and multifamily buildings.

Multifamily zoning doesn’t condemn modest homes

I emailed my council member, Cam Gordon, to express my support for the city’s draft comp plan, and to ask him about his concerns. He replied that he worried that upzoning the city would result in out-of-town investors to tear down the affordable homes in poor neighborhoods and charge high rents. I took a look, and there are almost 700 residential parcels in north Minneapolis that are zoned to allow multifamily and commercial uses. If developers thought there was a profit to be made in buying cheap lots over north and building market-rate apartments, they would be doing it right now. Zoning reform would, however, remove a barrier for affordable housing developers and community land trusts to build small multifamily projects on side streets, though.
Map showing single-family dwellings in multifamily zones in north Minneapolis

Starter homes have vanished from most of the city

Map showing that almost all homes outside of north Minneapolis are more expensive than $150,000
The above map shows the 2017 estimated market value of single-family homes in Minneapolis. Red parcels are more expensive than the average home in 1990 (adjusted for inflation), and blue parcels are less expensive. Starter homes have basically vanished from city, except for north Minneapolis and pockets of Phillips and Powderhorn.
The goal should be affordable housing for the many, not white picket fences for the few
Low-density zoning doesn’t protect cheap homes from being demolished, it just mandates that you can only replace it with low-density housing. Multifamily zoning doesn’t automatically condemn homes in neighborhoods with little development pressure, but it opens up avenues for affordable housing development. Cheap single-family homes have disappeared from most of the city. So what should we do?

4-unit apartment in a single-family zone

Four starter homes stacked together (not in compliance with zoning)

The goal, I hope we all agree, is to achieve decent and affordable housing in a convenient location for everyone who wants to live in the city. To get to that goal, we’ll have to expand our traditional conception of the starter home to include the multifamily housing (owner-occupied and rental) proposed in the draft comprehensive plan.

Scott Shaffer

About Scott Shaffer

Scott Shaffer works for a nonprofit community development corporation in Minneapolis. He has a master's degree in urban and regional planning from the University of Minnesota. He and his wife live in the Powderhorn Park neighborhood with their daughter and two Siamese cats.