If You Want to Find Affordable Housing, You Should Try Minneapolis

• Minneapolis is the first major metropolitan area to have inflation rates below the Fed’s 2% target.
• According to Bloomberg, Minneapolis hit the goal in May with an inflation rate of 1.8%. 
• The rate is likely due to aggressive legislating to address soaring housing costs in the city. 

Minneapolis is the first major metropolitan area to reach an inflation rate below the Federal Reserve’s target of 2%, likely due to its work to lower soaring housing costs across the city, according to reporting from Bloomberg.  

Minneapolis’s success in keeping inflation relatively low is partially thanks to their move in late 2018 to end single-family zoning, a plan that applied to 70% of Minneapolis’s residential land, per Bloomberg. The act allowed for increased density in Minneapolis. 

Since the zoning change, Minneapolis has invested over $300 million into rental assistance and subsidies, making it easier to build apartments and condos. 

According to the US Bureau of Labor Statistics, in May, the last recorded data, Minneapolis only had a 1.8% pace of inflation.  

In addition to having a lower pace of increasing prices, a chart created by Bloomberg showed that the city had more affordable ratios of income spent on rent than other large cities. 

While Minneapolis residents spent 39.9% of their monthly income on housing costs, their co-parts in San Francisco paid 46.7% of their monthly income to housing; residents of Boston shelled out a whopping 60.7% of their income for housing costs, per Bloomberg. 

Reporting from CNBC suggests that people in New York City could spend almost 70% of their monthly earnings to rent an average apartment. 

People ideally would spend around 30% of their income on housing, senior vice president of the National Low Income Housing Coalition Andrew Aurand, told CNBC. This makes Minneapolis one of the largest cities close to that target.

“The Twin Cities has historically been an affordable housing market relative to the nation,” Ron Feldman, vice president at the Minneapolis Fed and co-chair of the Itasca Project, said in an interview to Bloomberg. “We’re trying to make sure we keep it that way.”