There have been anecdotal reports of a housing shortage in the Twin Cities for years. Now, the Bloomington-Normal Economic Development Council has a new analysis that shows the shortage is significant and has grown since the last study done five years ago.
“We're looking at least 4,300 units. And that's based off of population projections before Rivian ramped up,” said EDC director Patrick Hoban. “Speaking with our Realtors Association, there's only nine homes on the market under $300,000, at the moment.”
Hoban said the shortage has forced more people to rent, which has a spinoff effect because there's also a shortage of upscale apartments.
"If you look at us and other markets, we have things like Ironwood Gardens, which is really nice, but having more of those types of units in the community would lead us to have more people in the rental side ... What they're doing now is renting single-family homes. Our rate of single-family home rental growth has actually doubled the national average,” Hoban said on WGLT's Sound Ideas.
The study shows from 2010 to 2020 , the national growth of home rental was 20% and in Bloomington-Normal it was 40%, or an extra 1,157 rentals, for a total of 4,100 home rentals in the metro area.
Hoban said there has been a shortage at least since 2010, but until recently developers weren't confident enough in the economy to build more. He said the purpose of the study is to prove to developers that there is a market for condos and upscale apartments and to get them to build that kind of housing stock to add to the inventory that dates to the 1980s or before.
Normally, the EDC does not deal with housing issues. But Hoban said it is contributing to a workforce problem.
“Because of challenges to workforce attraction and retention, we know that we have to hopefully promote diversifying the housing we have here in order to get more workers into the area,” he said.
More diverse housing also gives people more choices.
“We know anecdotally there are people coming from the East Coast and West Coast and buying some large 4-5 bedroom homes, just because they can, not necessarily because they need it. And it's more because we do not have the upscale amenities for them to rent or even purchase condos,” said Hoban.
The longer-term solution is to build more, though rising construction costs, supply chain issues, and rising interest rates are complicating that process. The Twin Cities is seeing some of the subdivisions that went dormant following the Great Recession now building out, though that does not necessarily address the need for more diverse housing stock, Hoban pointed out. A shorter-term solution is rehab and reuse of blighted properties.
“Supplies are in such demand right now, getting a new greenfield development will be more of a challenge compared to renovating say, a warehouse district or some of the buildings we already have in Uptown and downtown and converting those into residential because the materials are already there,” said Hoban.
Hoban also noted Illinois State University's plan to build a new 1,200-bed residence hall eventually will lessen pressure on home rentals and allow some workers coming to the community to rent homes around the university — once there is room for more students on campus.
He said the study data also makes the case for more infill instead of building on greenfield sites.
