Housing Industry News Vol. 6 Issue 6 - December 2022

Housing and homeownership challenges await Legislature

As the newly elected Minnesota Legislature begins its two-year session in January, a host of housing market challenges lie before them.

Uncertain economic conditions and the ongoing ripple effects of the past three years have exacerbated the persistent supply and affordability challenges impacting the housing market. Without enough homes to meet demand, pressure is dispersed across the housing spectrum driving housing affordability challenges to new heights.

According to U.S. Census data, Minnesota will likely finish 2022 more than 60,000 housing units short of the necessary inventory of homes.

Adding to the affordability challenge has been a major surge in mortgage rates. With 30-year mortgage rates creeping over 7% in 2022, homebuying cycles have slowed considerably. This moderation was met with prudence from the homebuilding industry, which saw permit activity drop throughout the back half of the year.

This dynamic leaves the Minnesota housing market in a challenging spot. With an undersupplied market and high mortgage rates, affordability and homeownership access have suffered and the urgency to act has increased.

Housing industry leaders are prioritizing housing supply as the top issue for the Legislature to tackle.

“Housing has to be a top-tier priority in 2023, both from the subsidy and policy perspective,” said James Vagle, CEO of Housing First Minnesota. “As we look at prioritizing policy work, addressing our market’s inability to produce market-rate

starter homes at scale must be in the top tier.”

Housing policy changes have been a challenge in Minnesota, where major housing policy reform on the state’s zoning laws hasn’t occurred in over 30 years. Some legislative leaders have indicated a willingness to address the current regulatory structure.

Housing finance discussions will center upon a debate about how much of the $9 billion surplus should be spent on housing, as well as structural budget commitments to support housing initiatives.

In a recent statement announcing his new chairmanship of the Housing Policy and Finance Committee, Rep. Mike Howard (DFL-Richfield) stated, “There’s no place like home, yet this basic necessity is unattainable for hundreds of thousands of Minnesotans and our housing crisis is only getting worse. The good news? Together, we

Twin

homebuilders respond to slowing market

According to the National Association of Home Builders Housing Market Index, builder sentiment in November fell to the lowest level since 2012, apart from the first two months of the COVID-19 pandemic.

Throughout the pandemic, builders were seeing fast and furious demand from buyers. But now, overall economic uncertainty and mortgage rate increases have led to a tapering off in buyer activity.

Builders are anticipating how this new market landscape will impact their business and are already making some changes to mitigate this changing

Cities

“Housing has to be a top-tier priority in 2023, both from the subsidy and policy perspective.”

James Vagle, CEO HOUSING FIRST MINNESOTA

Protecting homeownership opportunities

As we wrap up 2022 and look ahead to 2023, it’s a great opportunity to think about our industry priorities.

Whether you are a homebuilder, remodeler, developer or industry supplier, you know that our industry thrives on a healthy housing market with choices at all price points. And at the center of that housing market is homeownership.

Homeownership popularity extends itself to almost all Minnesotans – over 90% of us want to own a home. It transcends demographic, political and geographic differences that seem to impact other institutions.

It’s no surprise why homeownership is so popular. The National Association of REALTORS® did a study of the benefits of homeownership and it was powerful. Homeownership correlates to higher educational achievement, civic engagement, health and happiness, and it is the largest creator of individual wealth.

Considering all these benefits, the threats to homeownership are especially

worrisome. The cumulative impacts of years of underbuilding are now before us. Especially concerning is our market’s inability to build starter homes at scale.

So, when we think about our industry priorities, they begin and end with creating homeownership opportunities for all Minnesotans.

This is critical for the entirety of the housing market, including the rental segment of the industry. Homeownership opportunities and a healthy supply of starter homes help all housing, at all levels. We need all types of homes to serve Minnesotans.

I wish our entire industry well as we finish 2022 and embark on our 2023 journey, and I look forward to being part of the critical housing conversations facing Minnesota.

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HOUSING INDUSTRY NEWS

December 2022, Volume 6, Issue 6

PUBLISHER

James Vagle

James@HousingFirstMN.org

EDITOR

Katie Elfstrom Katie@HousingFirstMN.org

ASSOCIATE EDITOR

Laura Burt

GRAPHIC

DESIGN

Emily Doheny

ACCOUNTING

Janice Meyer

ADVERTISING SALES

Brad Meewes

Kori Meewes

CONTRIBUTING WRITERS

Katie Elfstrom

Katie@HousingFirstMN.org

Nick Erickson Nick@HousingFirstMN.org

Mark Foster Mark@HousingFirstMN.org

Kristen Ober Kristen@HousingFirstMN.org

Kate Wigley Kate@HousingFirstMN.org

James Vagle James@HousingFirstMN.org

Housing First Minnesota

James Vagle, Chief Executive Officer

James Julkowski, Board Chair

Housing Industry News is a publication of Housing First Minnesota. Housing Industry News is published and distributed six times per year to housing industry professionals and others associated with the homebuilding industry. Neither the advertisers, nor Housing First Minnesota, will be responsible or liable for misinformation, misprints, typographical errors, etc., herein contained. For address change information, contact Housing First Minnesota. Suggestions, ideas and letters are welcome.

HOUSING INDUSTRY NEWS 2960 Centre Pointe Drive Roseville, MN 55113 info@HousingFirstMN.org www.HousingFirstMN.org

Housing Industry News is published by Housing First Minnesota

Entire contents copyright 2022 All rights reserved

The Parade of Homes has a proud legacy of providing homeownership opportunities in our state. In our continued commitment to expanding the opportunity for homeownership for everyone, everywhere in our state, we’re pleased to have launched the Parade of Homes First-Time Homebuyer $10K Giveaway!

Thank you to our generous donors for making this possible.

Housing First Minnesota is the voice for homebuilders, remodelers and all who are dedicated to building safe, durable homes at a price Minnesotans can afford.

Housing First Minnesota is dedicated to advancing the American dream of homeownership for Minnesotans and is the leading resource for housing-related issues in Minnesota. This advocacy work has never been more important. The housing industry remains under intense regulatory and political pressures that impact Minnesota homeowners’ ability to buy, build and remodel their dream home. Housing First Minnesota supports reasonable policies, regulations and protections, but our call for affordability for families is a voice that must be heard.

Learn more at HousingFirstMN.org.

Onward, James Julkowski

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HousingIndustryNews.org

James Julkowski 2022 Board Chair, Housing First Minnesota

Across the country, there is much talk about housing

HERE ARE SOME OF THE LATEST QUOTES ON THE STATE OF THE INDUSTRY:

Rent control is among the dumbest policies known to man, but cities keep trying it.”

THE WALL STREET JOURNAL EDITORIAL BOARD

Currently in the housing market, we’re seeing rising mortgage rates, insufficient supply and elevated house prices bringing about significant affordability challenges. Gen Z has taken notice and their hopes of homeownership have waned as the potential issues they may face in purchasing a home have become front and center.”

PAM PERRY FREDDIE MAC

There is definitely a belief that home prices will go down. So, consumers are saying, ‘Why would I buy now if prices are lower in two months’ time or three months’ time?’ That mindset is freezing the market.”

ALI WOLF ZONDA

In fact, the average rate on a 30-year mortgage is above 7% — the highest rate seen in two decades. These high interest rates are increasing the cost of homeownership by more than $1,000 per month as home prices have continued to rise year-over-year. This steep increase in owning a home disincentivizes current homeowners to move, exacerbating affordability and supply constraints.”

REP. MAXINE WATERS (D-CALIFORNIA)

The silver lining for buyers is the reduced competition rather than anything related to the cost of a home. Buyers who can overcome affordability hurdles and remain in the market will have less competition and more time to consider their options, which is a stark change from last year when bidding wars were the norm.”

JEFF TUCKER ZILLOW

The housing market was very overheated for a couple of years after the pandemic as demand increased and rates were low. The housing market needs to get back into balance between supply and demand.”

JEROME POWELL CHAIRMAN OF THE FEDERAL RESERVE

Twin Cities homebuilders respond to slowing market

market. According to the latest report from Zonda, 61% of Twin Cities homebuilders surveyed reported that demand in October was “slower than anticipated” and was a point of worry.

“Interest rates have risen dramatically since the start of the year . . . putting a strain on housing affordability,” said Ali Wolf, Zonda’s chief economist. “Buyers were already starting to get priced out of the market when interest rates moved from 3% to 4%, and every 100-basis-point increase has continued to price millions of Americans out of homeownership."

Furthermore, 89% of builders surveyed in the Twin Cities expect a slower pace of housing starts next year, and 44% of those respondents expected housing starts to slow “significantly.” As a result, many builders are rethinking their strategies toward aspects like land acquisition and price structuring.

From the previous month, more builders indicated they were moving forward on land deals with caution and are bidding less on potential deals. Similarly, 39% of Twin Cities builders surveyed reported lowering their base prices that month.

However, of those builders who lowered their base prices, only 23% reported an uptick in sales.

Zonda expects that population and household growth in the Twin Cities will continue its already upward trajectory. As a result, demand for new homes in this market will also increase.

Judge offers tepid support for residential energy code adoption Energy Efficiency in Minnesota

Administrative Law Judge Eric Lipman issued his non-binding recommendation on the adoption of the 2021 International Energy Conservation Code (IECC), recommending opening rulemaking. His comments, issued in October, also noted that the agency could wait until the 2024 model codes are published.

“Accordingly, between the two alternatives presented to the Commissioner today, the Administrative Law Judge recommends a resort to rulemaking,” wrote Lipman. In his final paragraph, he noted, “With all of that said, the hearing record would support either the choice to move forward with a rulemaking or wait until promulgation of the 2024 version of the IECC.”

In 2020, Lipman recommended the Department of Labor and Industry (DLI) not open rulemaking on the 2018 IECC, a decision that was affirmed by DLI’s commissioner.

"On volume, Minnesota builds the most energyefficient homes in the country, and we have to stop looking at new homes as a problem in terms of efficiency and see them as the solution that they are,” said Nick Erickson, senior director of housing policy of Housing First Minnesota. "Opening rulemaking while interest rates are at a 20-year high, and Minnesota’s new home costs are at an all-time high will further threaten homeownership in our state.”

In a letter to DLI, James Vagle, CEO of Housing First Minnesota, asked the agency not to open rulemaking, noting that rulemaking is a lengthy process and the technical review of the 2024 model codes will soon begin.

In addition to Housing First Minnesota, Central Minnesota Builders Association and Builders Association of Minnesota opposed opening rulemaking during the public comment period.

State

Wanda Schroder, EXECUTIVE DIRECTOR CENTRAL MINNESOTA BUILDERS ASSOCIATION

“We already build incredibly energy-efficient homes,” said Wanda Schroder, executive director of Central Minnesota Builders Association, in response to the judicial recommendation. “We do not need to pile on more regulatory costs when we face a serious crisis in housing availability and affordability.”

Should DLI wait to open rulemaking until the 2024

Association Health

HERS Activity By STATE, RESNET (2017-2021)

IECC is ready, the process would happen concurrently with the rest of the ICC model code review. The technical review of the 2024 I-Codes will likely begin in 2024 with the codes put in place in March 2026.

The final decision on opening rulemaking will be made by DLI's commissioner. At the time of printing, Nicole Blissenbach is the agency’s temporary commissioner. The agency has yet to announce whether or not it will open rulemaking.

“We already build incredibly energy-efficient homes. We do not need to pile on more regulatory costs when we face a serious crisis in housing availability and affordability.”

Board of Electricity wraps technical review

In early December, the Board of Electricity’s 2023 National Electrical Code (NEC) review committee completed a four-meeting review of the 2023 NEC. This review marked a return to in-person technical review meetings, a first since the COVID pandemic began.

In July, Housing First Minnesota, the statewide housing trade association, called for a deeper technical review following the adoption of the 2020 NEC, which was completed over the course of two short meetings and approved by the Board of Electricity immediately after the technical review was complete.

“We’re very pleased with the more rigorous review,” said Nick Erickson, senior director of

housing policy for Housing First Minnesota. “One area of improvement in the future is the cost analysis. It is more complex than searching for the per-unit price of specific components on Home Depot or Amazon’s websites.”

The final meeting of the technical review was held on Dec. 6 and was to include a review of the final Statement of Need and Reasonableness (SONAR) which included the board’s cost analysis. The final SONAR and outcome of the December meeting were not available at the time of printing. A full review of the 2023 NEC, approved by the technical review committee, will be available on HousingIndustryNews.org once available.

Minnesota celebrates the 50th anniversary of the state building code

Before Minnesota had a state building code, each city oversaw its own code. On July 1, 1972, state law first required every city and county that had a building code to begin enforcing the Minnesota State Building Code.

The enabling legislation to the state code stated, “A multitude of laws, ordinances, rules, regulations, and codes regulating the construction of buildings and the use of materials therein is a factor contributing to the high cost of construction. Many such requirements are obsolete, complex, and unnecessary. They serve to increase costs without providing correlative benefits of safety to owners, builders, tenants, and users of buildings.”

To commemorate the 50th anniversary of the state building code, the Minnesota Department of Labor and Industry (DLI) has commissioned an illustrated guide of the state building code. Illustrated Field Guide to the Minnesota Residential Building Code is a custom version of the residential codebook designed specifically for Minnesota.

According to DLI, the goal of this publication is to create a published book that is useful, simplifies code compliance and minimizes any misunderstandings of what the code says for both builders and building inspectors. Illustrations in the new guide were designed to eliminate many of the common controversies and are detailed enough to design footings, foundation walls and beams.

Beginning in January 2023, Illustrated Field Guide to the Minnesota Residential Building Code will be available for purchase. A free online version will also be available on the DLI website.

Photo: LandMark Photography

Illustrated Field Guide to the Minnesota Residential Building Code will be available January 2023.

The final meeting of the technical review was held on Dec. 6 and included a review of the final Statement of Need and Reasonableness.

How zoning broke the American city

Q & A with M. Nolan Gray, researcher, planner and Mercatus Center-affiliated scholar

Q: At the time, did you think that the housing issues would grow the way that we've now seen?

M. Nolan Gray Researcher, planner and Mercatus Center-affiliated scholar

This

Q: Let's start with a little background information. How did you get into city planning and what drew you to focus on poor zoning policy and arbitrary lines?

Gray: It's a pretty simple story. Fresh out of undergrad I moved to D.C., fell in love with D.C., and became just fascinated by cities as these places where you could move and find incredible opportunities and encounter new people and ideas.

And I just fell in love with the whole idea of what it was going take to build better, stronger, more affordable cities. Concurrently to that — this was the early 2010s — the early “yes, in my backyard” (YIMBY) movement was sprouting up in San Francisco. At the time, most places didn't have a housing affordability problem – or at least didn't think of themselves as having a housing affordability problem.

But as those issues ramped up and I became more interested in some of the regulatory barriers that stand in the way of new housing production – especially affordable housing – zoning really was at the center of that story.

Gray: When I would talk to policymakers in a place like Kentucky or Idaho in the late 2010s – or let's say 2018-2019 – you kind of had to convince them to think about stuff like this. I think there was this notion of there being a housing affordability problem in the Bay Area or Boston, but that's just coastal folks who don't know how to run their states; we don't have that problem here. And I would say, look at some of the codes you have on the books; look at some of the entitlement processes that you have that make it very hard to build.

It was just a matter of time before you were in a similar situation as some of these other states. And, it did. Did I think it was going to get quite as bad as it is today? No. I also didn't think we would be in the middle of a pandemic. So, a lot of things happened over the last few years that were unexpected.

I think what's really happening now is that a half-century of rules that deliberately tried to make it hard to build affordable housing, particularly infill housing, is coming home to roost, and we're having a reckoning. But I'm actually very optimistic. The level of the conversation and the extent of the conversation, I think, is very positive.

Q: In your book, you present the case that zoning is broken and not worth saving. You’ve outlined what you present as “zoning abolition” as being necessary for building a more affordable, vibrant and equitable future for our cities—and one that's also sustainable. Can you explain that?

Gray: In the book, part one is explaining what zoning is and where zoning comes from, which is important to understand what it does today. Part two covers four of the areas where zoning has really gone kind of wrong. And you know, those are arguments that we can get into: zoning is increasing the cost of housing; zoning has made it particularly hard to move

into some of our higher productivity or wealthier areas; and of course, it's entrenching historical, racial and class-based segregation. It’s just making it hard to build more environmentally friendly, compact, walkable cities.

I think a lot of people are on board with are many of those arguments. I think most people agree: we need some zoning reform, especially in San Francisco or Los Angeles. And, we need to have a reckoning with the racial history of these rules. I think in the near term, reform absolutely makes sense.

We've inherited this institution called zoning, where we basically said, ‘every 20 to, realistically, 50 years we're going to write this code where for every single lot, every single parcel in the city, we're going to say this is a permitted list of abuses.’ So not only residential, commercial and industrial, but incredibly detailed distinctions of what type of commercial will be allowed here but not there, and duplexes might be allowed here, but not if they're fourplexes.

But if you actually look at the origins of zoning, it was trying to do something very different. What I'm asking is, ‘hey, what do we want planning to do?’ I think everybody agrees that we have to be thoughtful about managing incompatible neighbors or that we want to coordinate infrastructure and growth.

I would argue that zoning just hasn't accomplished those planning objectives. And to the extent that it does, it's the worst possible way to do it with all these spinoff problems, all these mechanisms that allow for affordability and exclusion issues. And so, this is what I'm trying to do with the book. I'm trying to hit the reset button on land-use planning and what it's going to take to actually build more affordable, equitable, sustainable cities.

Q: What do you think planners of housing can do to better combat the NIMBY sentiment that is blocking the needed housing that we're trying to build?

Gray: I think there are two elements here. I think there's a cultural element, and I think there's a political element.

I think the cultural piece is really interesting, because I don't know a lot about it. I have a sense. So, I think part of what went wrong was that, historically, the NIMBY is the hero, right? You can see this in a lot of films – there are so many films where there's an evil developer coming in. I think of the Goonies where the developer wants to take their home and turn it into a golf course. Okay, I'm sympathetic with the NIMBYs in that case, but we have these narratives that we've inherited, that we're very comfortable with a big evil developer that’s trying to build something, defile nature, and so on. We don't really have that narrative of someone trying to build housing that someone needs, a person who probably already lives in your community needs a home.

Yeah, the developer is going to make money. Generally, people who provide essential goods and services get paid for what they do. The person who is opposing the project might be doing it for selfish reasons, or might be doing it because maybe they're small minded about what it means for their community to grow and adapt.

That's a much more complicated narrative. I think we are flipping that narrative – especially in some of the discourse that's happening online. It's slowly translating into the real world where people are at these meetings, and they're saying, ‘No, I'm sorry, actually, the person who is having a meltdown about community character or about there being slightly more traffic is maybe not the good person in this giant fight.’ So that's the cultural element, and I'm curious to talk more about that.

The political element of that is changing our institutions to where we don't invite NIMBYism. To get back to the discretionary piece, we've kind of organized our entire entitlement framework around appeasing NIMBYs. So, we have that public hearing where we invite the person to come to a Tuesday at 10 a.m. meeting. And lo and behold, this person is not very representative of the community and does not have a lot of constructive feedback to add in person. In many cases this can heavily determine the course of how that application goes.

To listen to the full interview with M. Nolan Gray check out the “Let’s Talk Housing” podcast at housingfirstmn.org.

Gov. Walz announces cabinet reappointments

Following his electoral victory for a second term, Gov. Walz announced that 16 of the 20 state agency commissioners will be reappointed to their roles, including several commissioners that play a role in housing. Housing Commissioner Jennifer Ho, Pollution Control Commissioner Katrina Kessler and Department of Natural Resources Commissioner Sarah Strommen will all be reappointed.

Among the remaining vacancies, Walz will need to appoint a new leader for the Department of Labor and Industry, following Roslyn Robertson’s retirement in August. Nicole Blissenbach has served as temporary commissioner since and was not included on the initial list of reappointments from the governor’s office.

The Minnesota Department of Health, whose past lead paint proposals have drawn the ire of the remodelers, is also left without a commissioner as Jan Malcolm announced she will be retiring. A new commissioner has yet to be announced.

is an edited excerpt from the Let’s Talk Housing podcast interview with M. Nolan Gray.

Housing First Minnesota honors 2022 Legislators of the Year

Housing First Minnesota, the state’s leading voice for housing, has recognized Sen. Jeff Howe (R-Rockville) and Rep. Steve Elkins (DFL-Bloomington) as recipients of the 2022 Legislator of the Year awards. The honor recognizes legislators for their efforts in promoting housing affordability and homeownership opportunities for everyone, everywhere.

“As more Minnesotans struggle with housing affordability and achieving the dream of homeownership, Sen. Howe and Rep. Elkins have served as valuable voices for these homebuyers at the Capitol,” said James Vagle, CEO of Housing First Minnesota. “We applaud them for their diligent efforts to advance significant housing legislation during the 2022 legislative session.”

For many years, Howe has been a champion of the housing industry in St. Paul. As a building official, he acutely understands the obstacles that face the industry and homebuyers. During the legislative session, Howe was a leader in the local government committee, advocating for homebuyers and finding ways to reduce housing costs.

Late in 2021, Elkins introduced the most comprehensive housing legislation in decades. Among many things, his Housing Affordability Act would modernize Minnesota’s land use practices, stop mandates for luxury material upgrades, restore reasonable homeowner choice and end zoning by loophole. During the legislative session, this bill received multiple hearings in both chambers of the legislature. Thanks in part to efforts from Elkins,

Rep. Steve Elkins (DFL-Bloomington) and Sen. Jeff Howe (R-Rockville) were presented the 2022 Legislator of the Year awards in October.

the cost drivers that go into building starter homes received more legislative discussion than the state has seen in many years.

The awards were presented to the legislators in October during Housing First Minnesota’s annual Building Industry Gala at Mystic Lake Center. The event celebrates the housing industry and recognizes industry members for their excellence in building and remodeling homes for Minnesotans.

New faces among legislative leadership

In the days following the election, each legislative caucus held its own internal meetings to nominate its leaders. Three of the four leaders will be brand new to the role.

House Speaker Melissa Hortman (DFL-Brooklyn Park) will be the only returning legislative leader, after being nominated to serve her third term as speaker of the Minnesota House of Representatives. On the other side of the aisle, Rep. Lisa Demuth (R-Cold Spring) will lead the minority caucus, replacing Rep. Kurt Daudt (R-Crown).

In the state Senate, Sen. Kari Dziedzic (DFL-Minneapolis) will replace the retiring Democratic Senate leader, Sen. Melisa Franzen (DFL-Edina). Sen. Mark Johnson (R-East Grand Forks) will replace Sen. Jeremy Miller (R-Winona) as the leader of the Republican Senate caucus.

Additional leaders of the caucus that have also been announced as of print include:

• Rep. Jamie Long (DFL-Minneapolis) as House Majority Leader

• Rep. Athena Hollins (DFL-St. Paul) as House Majority Whip

• Rep. Paul Torkelson (R-Hanska) as House Deputy Minority Leader

• Sen. Bobby Joe Champion (DFL-Minneapolis) as Senate President

• Sen. John Marty (DFL-Roseville) as Finance Chair

• Sen. Ann Rest (DFL-New Hope) as Tax Chair

Rep. Lisa Demuth (R-Cold Spring), Sen. Kari Dziedzic (DFL-Minneapolis), House Speaker Melissa Hortman (DFL-Brooklyn Park), Sen. Mark Johnson (R-East Grand Forks)

National median mortgage payment hits new high

The national median mortgage payment continued to climb in October. According to the Mortgage Bankers Association's (MBA) Purchase Applications Payment Index (PAPI), the national median payment applied for by applicants increased 3.7% in October to $2,012 from $1,941 in September.

“Prospective homebuyers continued to feel the effects of higher mortgage rates in October, with the 70-basis-point jump in rates leading to the typical monthly mortgage payment rising to a new survey high of $2,012,” said Edward Seiler, MBA's associate vice president of housing economics and executive director at Research Institute for Housing America. “Higher mortgage rates are also squeezing the purchasing power of prospective buyers.”

MBA notes that mortgage payments are up by $629 in the first 10 months of the year, equal to a 45.5% increase.

An increase in MBA’s PAPI – indicative of declining borrower affordability conditions – means that the mortgage payment to income ratio (PIR) is higher due to increasing application loan amounts, rising mortgage rates, or a decrease in earnings. A decrease in the PAPI – indicative of improving borrower affordability conditions – occurs when loan application amounts decrease, mortgage rates decrease, or earnings increase.

The national PAPI increased 2.7%to 167.9 in October from 163.6 in September. The index eclipsed the previous high of 164.2 in May 2022. The index has jumped 36.0% in the first 10 months of 2022 and is up 38.1% compared to October 2021.

CONTINUED

Housing and homeownership challenges await Legislature

have the power to change course. Through a bold vision that challenges the status quo and one that centers the voices of Minnesotans, we can create a future where a safe, affordable home is attainable for everyone.”

On the policy front, housing groups have previously focused on zoning modernization, permitting efficiencies and streamlining approval processes in an effort to encourage the creation of affordably built starter homes.

With 2023 as a full budget session, it is expected that this debate will stretch into May as leaders search for a balance of funding and policy with Gov. Walz, who was elected to his second term.

“There is an urgency in housing that we haven’t seen in decades,” said Vagle, citing the importance of action in 2023. “We are counting on the legislature to engage on this and help preserve homeownership opportunities for the next generation of Minnesotans.”

Purchase

The 2023 Legislative Session starts Jan. 3, 2023.

Source: Mortgage Bankers Association

Fluctuating interest rates and overall economic uncertainty are continuing to impact the housing market. Homebuilders in the Twin Cities are also feeling the slowdown. In the month of October, permits for new single-family homes were down 54% from the previous year. Overall affordability also continues to be a hurdle for potential buyers. The Twin Cities median home price in October was $356,000.

Employment Update

Construction employment in Minnesota grew 2.1% year-over-year in October. This is equivalent to 2,916 being added throughout the industry.

Builder of the Year announced at 2022 BIG Night

Members of the housing industry recently came together for Housing First Minnesota’s Building Industry Gala (BIG Night). This year’s event was hosted at Mystic Lake Center with more than 700 members of the industry in attendance.

As part of the annual BIG Night, Housing First Minnesota awarded its coveted Builder of the Year, Remodeler of the Year and Associate of the Year, among a spread of dozens of other awards. Hendel Homes was awarded Builder of the Year; Revision, LLC was awarded Remodeler of the Year; and Minnesota Construction Law Services, PLLC was awarded Associate of the Year.

Housing First Minnesota’s annual recognition of industry members is based on several criteria, including recognizing firms that exemplify the highest standards of business as judged by their peers and customers.

“Homebuilding is truly a collaborative effort of many companies and individuals, and these awards

are a celebration of how the industry works together to create homes for Minnesota families,” said James Vagle, CEO of Housing First Minnesota. “Now more than ever it’s important we recognize and reflect on the important work we do creating communities in our state.”

Other awards presented at the event included the Robert L. Hanson Lifetime Achievement Awards, which were presented to Gary Horkey of Key Land Homes and Ron Clark of Ron Clark Construction and the Legislator of the Year Awards which were presented to Sen. Jeff Howe (R-Rockville) and Rep. Steve Elkins (DFL-Bloomington).

The Bennie Award for excellence in neighborhood design and construction went to Charles Cudd Co., LLC for its Shores of Marsh Lake neighborhood in Victoria.

Additionally, 20 Reggie Awards and 18 Remodeler of Merit Awards were presented to builder and remodeler companies throughout the event.

Housing industry gathers for sport

It was another beautiful fall day for the annual 2022 Clay Shoot hosted by Housing First Minnesota at the Minnesota Horse and Hunt Club in October. Over 200 members of the housing industry participated in the friendly competition with industry peers.

The annual event once again served as a fun event for housing industry members to connect. This year’s best shooters were Sean McBride with USI Insurance Services and Kristin Reintiz with Admit One Home Systems. Pioneer Engineering, P.A. took home the prize for best team for the 7th year in a row.

Women business leaders inspire high school students

More women are working in construction than ever before, according to the Bureau of Labor and Statistics. As the labor shortage in the construction industry continues to hinder businesses, encouraging more women to join the industry has become even more important.

Women in Construction (WINC) organized for several women business leaders in the Twin Cities construction industry to connect with local students about a career in construction. Danielle Yegge, owner of Style & Structure; Sunny Bowman, president and owner of Dakota County Lumber Co.; Kristin Reinitz, director

of business sales and development with Admit One Homes Systems; Cheryl Asmus, territory manager at Formica Corp; and Angie Doll, director of marketing with GreenHalo Builds, shared their background in the industry and the career paths available in the industry with students at Stillwater High School in October.

“It was really fun seeing how shocked the kids were about all the job possibilities there are in the building industry,” said Yegge. “Most people immediately think about a job out in the field when they think of working for a builder, which is great for some, but there are so many other positions and people that help get a build to the finish line.”

Over 100 students attended the presentations at Stillwater High School. The group of leaders hopes to visit more classrooms in the coming year to continue to share with students the many job opportunities in construction.

Hendel Homes accepts the award for Builder of the Year from Housing First Minnesota.

WINC organized for several women business leaders in construction to speak with Stillwater High School students.

Over 200 housing industry members attended the 2022 Clay Shoot event.

Housing First Minnesota Foundation announces new executive director

The Housing First Minnesota Foundation is pleased to announce Jessica Ryan as the new executive director. Ryan has more than 20 years of experience in philanthropic strategic leadership and nonprofit operations. She will help lead the Foundation and its 16-member board in its strategic mission to end homelessness in Minnesota.

“We’re pleased to announce Jessica Ryan as the Housing First Minnesota Foundation’s

new executive director as she brings a wealth of experience and expertise in philanthropic strategic leadership,” said Kate Hamilton, the 2022 Housing First Minnesota Foundation president. “With her leadership, the Foundation is poised to strengthen its mission to provide safe, dignified housing for those in need in our community.”

The Housing First Minnesota Foundation works to build futures through housing

New homes under construction for veterans in need

The Housing First Minnesota Foundation, Lennar and the Minnesota Assistance Council for Veterans have once again partnered to build four Housing for Heroes homes, each with an accessory dwelling unit (ADU) in North Minneapolis. Construction is underway on the first two homes, with the last two to begin this winter.

Each four-bedroom home is accom

for veterans who are transitioning out of homelessness. Currently, there are 272 veterans on the state’s homeless veteran registry. Once the homes are completed, it will provide veterans with stable housing and supportive services they need to find success once again.

“What makes these four homes extra special is not only will they provide shelter to an additional 20 veterans, but the ADUs will help veterans who need a bit more space and independence in their housing needs,” said Jessica Ryan, executive director of the Housing First Minnesota Foundation.

for Minnesotans in need by partnering with service organizations to build and renovate transitional housing facilities that will have a lasting impact on lives for years to come. The Foundation leverages the expertise and resources of Housing First Minnesota’s builder, remodeler and associate members

The Foundation's latest community build project includes four four-bedroom homes with one-bedroom ADUs to house veterans in need.

Join hundreds of local housing industry professionals as we gather in support of Minnesota’s housing industry.

Housing Day at the Capitol serves as a way for you to get involved and hear from industry leaders and legislators on key housing issues at the Capitol. It is more important than ever that we work with lawmakers to remove the roadblocks that stand in the way of building new housing in our state.

“With her leadership, the Foundation is poised to strengthen its mission to provide safe, dignified housing for those in need in our community.”

Kate Hamilton, PRESIDENT HOUSING FIRST MINNESOTA FOUNDATION

MWF Properties, a Richfield-based developer that specializes in multifamily projects, is moving forward with a 125-unit building geared toward people 55 and older. The project, which will provide a mix of studios and one- and two-bedroom apartments, will provide nine units available to those making 30% of the area median income (AMI), 23 units at 50% AMI, 43 units at 60% AMI and the other 50 units at 70% AMI. The project is moving through the city council now, and MWF plans to break ground in 2023. This will be the developer’s third project in Bloomington.

Twin Cities real estate development company Doran Group is relocating its corporate headquarters from Bloomington to Eden Prairie in 2023. After closing the $3.5 million acquisition, Doran Group plans to invest another $1 million into building improvements and amenities. The 19,000-square-foot space will include free parking, a full

Popularity in pickleball grew during the pandemic, and developers are confident enthusiasm for the sport is here to stay. Smash Park, an Iowa-based entertainment venue company, is building its first of two Twin Cities venues about a mile north of Roseville Center. According to an announcement from the company, the massive Smash Park site will include about 30,000 square feet of indoor space slotted for pickleball courts, ax throwing, bowling, karaoke booths, live music, and food and drink. It will also feature an additional 15,000 square feet of outdoor patio space and a rooftop bar. Meanwhile, Minneapolis-based Ryan Companies recently broke ground on Pints and Paddle, a 40,000-squarefoot indoor pickleball venue scheduled to open in fall 2023. The Maple Grove compound will offer 10 indoor pickleball courts, casual dining, and pour-your-own beer and wine on tap.

Bloomington progresses affordable senior housing project

PHOTO: BRING ME THE NEWS STORY: BRING ME THE NEWS & REJOURNALS

Doran Group relocates headquarters to Eden Prairie

PHOTO & STORY: FINANCE & COMMERCE

PHOTO & STORY: FINANCE & COMMERCE

Pickleball venues are popping up throughout the Twin Cities

PROCESS IS KING

Our mantra of “work smarter, not harder” helped us achieve our 125th anniversary milestone. Having processes in place, especially in our truss plant, is critical. Obtaining team buy-in and protecting our culture is just as important.

When we think of process passion, the first person that comes to mind is Justin! While relatively new to the team, he clearly gets it. He shared, “I love the fastpaced environment and the opportunities I have for growth. It’s exciting to watch production move through design to delivery”.

Justin, we appreciate your understanding of the big picture and all the hard work you do to ensure our customers receive only the best!