Housing Industry News Vol. 8 Issue 4 - December 2024
reform arises as one of the few bipartisan opportunities
Minnesota voters seem to prefer a split state government. History shows that there has been one-party control only four out of the past 34 years, including 2023 and 2024.
Following the most recent election, the Minnesota Legislature will enter the 2025 legislative session as evenly split as possible with the House of Representatives standing at 67 members for each, DFL and GOP, and the Minnesota Senate remaining in DFL control with a 34-33 margin. Gov. Tim Walz (DFL) will return to Minnesota to finish his second term following his top-of-ticket loss as the Democratic vice-presidential candidate.
“This is likely to be the most divided Minnesota Legislature we have seen in a generation,” said Mark Foster, vice president of legislative and political affairs. “Only policy issues that can receive strong bipartisan support will be seriously considered. That’s where housing comes in. In recent years, members from both parties have elevated housing policy reform, and these issues should be a top priority for our newly elected officials to get to work on.”
Throughout the 2024 campaign, as housing costs continue to rise, housing availability and affordability issues garnered more attention from voters than ever before. So much so that 91% of Gen Z
voters viewed housing affordability as “very important” or “somewhat important” in their voting decisions, according to a Redfin survey. First-time homebuyers reached a new all-time high for median age as housing prices and mortgage rates have increased — the median first-time homebuyer’s age was 38 years old in 2024, up from 35 in 2023.
“Homeownership opportunities rank as one of the top issues for more and more Minnesotans,” said James Vagle, CEO of Housing First Minnesota. “As we saw last legislative session, addressing the barriers unnecessarily driving up the costs of housing is an opportunity for bipartisan agreement. Without significant statewide reforms, our housing market will remain woefully undersupplied.”
During the 2024 session, a unique and diverse coalition of business associations, labor groups, environmentalists, housing advocates and more supported the “Minnesotans for More Homes” agenda. The bipartisan legislature was introduced as a slate of bills geared toward allowing for the creation of more homes and greater affordability options. Multiple pieces of this agenda were signed into law in May, but many pieces were unable to get across the finish line.
confidence rises amid affordability challenges
12 Industry excellence celebrated at annual awards gala
14 Partnership delivers three new transitional homes for veterans
18
Housing Leadership Summit addresses US housing crisis, explores bipartisan solutions
Industry leaders, policymakers and advocates gathered at the 2024 Housing Leadership Summit in September to discuss the nation’s growing housing affordability crisis. Presented by Housing Affordability Institute and sponsored by Zillow and the Polymeric Exterior Products Association, the summit covered a wide range of topics, from state legislative reforms to Supreme Court rulings that impact the housing market.
Kicking off the summit, a panel discussed housing reforms in Housing policy
With a split Minnesota Legislature in 2025, housing affordability is poised to become a key area for bipartisan collaboration in the upcoming session.
As we move past the elections and look forward to a critical year for the housing industry, it’s impossible to miss how housing issues emerged this fall and what it means for 2025 and beyond.
In poll after poll, Minnesota and American voters consistently indicated that housing affordability was a major challenge and that housing reform was a top issue. For the first time in the modern era, both presidential candidates spoke of increasing housing affordability and access for Americans. In a divided world, housing policy stands apart as something everyone is thinking about and something we all prioritize as we look ahead.
So, where does the housing discussion go from here?
I think we can expect discussion and some action on the federal level as the administration ushers in a new cabinet with new priorities. And while the federal government does not impact projects as directly as local and state governments, there are issues like the Stormwater Permit and Lead RRP Rule that flow from a federal requirement. With the newly formed Department of Government
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housing
Efficiency (DOGE) entering the discussion, Housing First Minnesota will be engaging at the federal level to identify and urge efficiency actions on these and others.
As we all know, local governments are ground zero for the housing industry, and where we see the greatest work to modernize the regulatory system to allow more housing options and gain efficiencies. Allowing more housing types in more locations is an important initial step. Modernizing performance standards is also necessary for increasing affordability, density, and inventory. What is allowed on paper must be allowed in practice to reach the necessary housing production levels.
In addition to addressing the local policies impacting the housing crisis, state leaders can also examine environmental regulations, building codes and labor regulations to ensure that housing costs are part of the equation. For the many states yet to undergo a thorough review of policy barriers and challenges, a housing task force is a great place to start.
Our team at Housing First Minnesota is
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prepared to lead the homeownership discussion as we convene a growing coalition of organizations committed to this cause. I invite all in our industry to join this critical conversation as we look towards 2025.
Let’s Build it Together,
Art Pratt
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Across the country, there is much talk about housing
HERE ARE SOME OF THE LATEST QUOTES ON THE STATE OF THE INDUSTRY:
Rate buydowns and an undersupplied market are keeping homebuilders busy but starts are down slightly year-over-year. Multifamily starts, however, are down 21% year-over-year. Policy reforms at the local and state level are necessary to ramp up production, and the newly elected congress can and should incentivize states to act on housing reform.”
JEROME POWELL FEDERAL RESERVE
We’re seeing different activity in different price points, areas and segments — such as condos or new construction. What’s impacting $1M+ buyers isn’t necessarily on the mind of a $300,000 buyer, and condos and new construction are better supplied and more accessible than the existing single-family market, for example.”
JAMAR HARDY MINNEAPOLIS AREA REALTORS
Decades of over-regulation have made it increasingly difficult to build new homes and rehabilitate old ones. For many small builders, it’s now close to impossible. And as fewer new homes come on the market, the cost of other homes rises even faster.”
LAURA ESCOBAR LENNAR MORTGAGE
The real issue with housing is that we have had and are on track to continue to have not enough housing . . . it’s hard to zone lots in places where people want to live . . . the supply question will have to be dealt with by the market and by government.”
JEROME POWELL FEDERAL RESERVE
With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry . . . This is reflected in a huge jump in builder sales expectations over the next six months.”
CARL HARRIS NAHB CHAIRMAN
High housing costs have become part of the economic ‘vibes’ — alongside gas and grocery prices — that people see on a regular basis . . . People who own their home and have a low mortgage rate feel stuck, and people who haven’t been able to buy yet worry they will never be able to own now.”
Building Code reviews ramp up; housing groups oppose lead paint rule
In September, a coalition of housing groups sent a letter to the Minnesota Department of Health (MDH) to express ongoing concerns about the department’s latest draft of the Lead Renovation, Repair, and Painting (RRP) Rule. MDH’s proposal, which has been in development for nearly a decade, would shift enforcement of the federal RRP Rule from the Environmental Protection Agency (EPA) to the state. This draft proposal would make Minnesota unique, as all other states with their own RRP Rules simply adopt the federal guidelines by reference rather than creating entirely separate standards.
In the letter, the coalition, which includes six organizations, outlined specific technical issues with the latest draft and asked MDH to provide a written response addressing three critical points:
A summary of any Minnesota laws or rules that conflict with the EPA’s RRP Rule.
A comparison between the EPA Rule and MDH’s current proposal.
An economic analysis of the cost differences between the MDH proposal and the EPA version.
The letter was signed by Housing First Minnesota, Minnesota Association of Realtors, Minnesota Multi Housing Association, Builders Association of Minnesota, NARI Minnesota and the Central Minnesota Builders Association.
Residential building TAG begins
The Technical Advisor Group (TAG) reviewing the Minnesota Residential Building Code (Chapter 1309) began its work in November, which is expected to continue into February. TAG Members include Kyle Thrapp of McMonigal Architects, Nathan Weber of the city of Detroit Lakes, Keith
Demarset of the city of Anoka, Steve Kartak of the city of Eden Prairie, Lisa Hartwig of the city of Minneapolis, Curtis Johnson of Pulte Homes, Greg Olson of ProEd Resources and Mike Paradise of Bigelow Homes.
Single-stair apartments approved
The TAG responsible for overseeing the Commercial Building Code (Chapter 1305) approved a proposal to allow single-stair access in multifamily buildings up to four stories tall. This change, set to take effect in 2026, raises the limit from the current maximum of three stories.
Stephen Smith from the Center for Building North America shared on LinkedIn, “The approval was a rare unanimous one.”
However, there are some limitations to ensure safety and functionality. Each floor will be capped at 4,000 square feet, with no more than four units per floor.
The proposal is still under technical review but is expected to be included when the 2026 Building Code update is finalized.
Other code updates
The 2024 UPC ad hoc Committee continues to review changes to Minnesota’s Plumbing Code. Meetings are scheduled through April 2025.
The Fuel Gas and Mechanical Code TAG will be transitioning its work to developing a mechanical code for residential buildings.
The Residential Energy Code TAG will resume its work and begin reviewing the 2024 International Energy Conservation Code (IECC). This TAG has been on hiatus since completing the 2021 IECC in February. All codes will have to work through the Minnesota Rulemaking process. DLI will complete rulemaking on the State Building Code, then shift to the Plumbing Code.
Lawsuit challenges Montgomery County’s natural gas ban in new construction
Montgomery County in Maryland has instituted a natural gas ban on new construction, set to take effect in 2026. Several organizations have joined together to file a lawsuit challenging the legislation, arguing that the ban is preempted by the Energy Policy and Conservation Act (EPCA), which sets energy and efficiency use standards for covered gas appliances.
If put into effect, the ban could negatively impact builders, construction workers, restaurants, small businesses and consumers. The National Association of Home Builders (NAHB) says that the ban would “exacerbate the housing affordability crisis by increasing costs on new homes, eliminate consumer choice and further strain America’s already stressed electric grid.”
In July 2019, Berkeley, California became the first U.S. city to prohibit natural gas infrastructure in new buildings, with the aim of reducing carbon emissions. The California Restaurant Association (CRA) then filed a lawsuit to block the legislation, which was initially dismissed but later heard by the U.S. Court of Appeals for the Ninth Circuit, who ruled that the city of Berkeley had overstepped its authority.
When creating the legislation, the city of Berkeley attempted to circumvent the EPCA by prohibiting permits for new natural gas piping in their building code. Judge Patrick J. Bumatay wrote that the EPCA preempts state and local regulations, including building codes, setting an important precedent for other cities considering gas bans.
In Minnesota, bills were introduced in 2023 by Rep. Mekeland and Sen. Mathews to prohibit bans on new natural gas or propane hookups in any building. The bills were not heard in either body of government.
Builders and businesses are pushing back against Maryland county’s natural gas ban.
Housing Leadership Summit addresses US housing crisis, explores bipartisan solutions
Arizona, Colorado and Minnesota, each of which has struggled with a significant housing shortfall. Moderated by Phil Crone of Leading Builders of America, the session brought together state officials and housing advocates, including Eleni Angelides from Colorado’s Office of the Governor and Minnesota State Representative Mike Howard.
The conversation revealed that all three states are experiencing similar challenges: a lack of available homes drives up prices and rents. However, the panelists agreed that the problem is not simply a housing shortage but a housing policy crisis.
Efforts to reform land use laws — many of which were initially stalled in 2023 — gained traction in 2024, bringing significant policy changes across the finish line in both Arizona and Colorado. These reforms include the legalization of accessory dwelling units (ADUs) and easing restrictions on multifamily housing in key urban areas. In Minnesota, the Legislature passed a landmark bill exempting comprehensive housing plans from environmental reviews, a move that could pave the way for more housing development.
Despite these victories, panelists admitted that the road to meaningful reform is far from over.
“No state has solved its housing crisis in a single legislative session,” said Angelides, adding that there is still more work to be done in 2025.
Later in the event, Tobias Peter of the American Enterprise Institute and Seva Rodnyansky of Pew Charitable Trusts discussed how small-scale policy changes — such as eliminating parking mandates and relaxing building codes — could pave the way for more affordable housing options. Rodnyansky cited Minneapolis as an example, where reforms introduced in 2009 have led to lower rent inflation and a reduction in homelessness.
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Mark Foster from Housing First Minnesota joined Anne Mavity of the Minnesota Housing Partnership and Cristen Incitti of Habitat for Humanity Minnesota to examine the importance of building coalitions for housing reform. This session highlighted how diverse groups — ranging from local government officials to housing advocates — helped push forward key pieces of legislation in Minnesota.
A key takeaway from this discussion was the need for broad, inclusive coalitions.
“Coalitions are big tents, and we need to make them bigger,” said Mavity, emphasizing the importance of growing support from both rural and ur ban areas.
Brian Hodges of the Pacific Legal Foundation unpacked recent Supreme Court rulings that affect housing costs. The Sheetz v. El Dorado decision, which limits exorbitant municipal fees on new home construction, was seen as a victory for housing affordability by many in the housing industry, as it required municipalities to reassess the burdensome fees placed on new homebuilders.
One of the summit’s final panels, featuring Minnesota State Senators Lindsey Port (DFL) and Eric Lucero (R), emphasized the importance of keeping housing reform bipartisan. Both senators agreed that while their approaches to housing differ, the issue is too critical to allow partisan politics to impede progress.
“People should have an opportunity to live in the kind of housing that they want to live, in the community that they want to live in,” Port said. “Historically, regulations about zoning and land use have been used to segregate communities and though that might not be as explicit as it was during the days of redlining, it is still one of the main factors behind so many laws as they exist and we can’t pretend that that’s not true.”
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Sen. Lindsey Port and Sen. Eric Lucero share insight on why housing has been and should remain bipartisan with Beth Wanless, regional government affairs manager for Zillow.
Lawmakers recognized for championing homeownership opportunities in the state
Housing First Minnesota has honored Sen. Lindsey Port (DFL-Burnsville) and Rep. Michael Howard (DFLRichfield) as their 2024 Legislators of the Year, recognizing their significant contributions to housing affordability and homeownership opportunities across the state.
According to Housing First Minnesota, during the 2024 legislative session, both lawmakers played pivotal roles in advancing discussions on land-use and zoning reforms.
Port, who served as Chair of the Senate Housing and Homelessness Prevention Committee, championed bipartisan initiatives aimed at addressing Minnesota’s housing deficit and affordability challenges. She authored and supported numerous
bills designed to streamline housing development approvals statewide.
Howard, as Chair of the House Housing Finance and Policy Committee, spearheaded the “Minnesotans for More Homes” agenda, collaborating with legislators from both parties to promote the development of diverse housing options, including smaller starter homes on reduced lot sizes.
“There is no greater issue that we need to tackle in the state of Minnesota than to build more homes, so that every Minnesotan has the opportunity to live in a place that they can afford in a community where they can thrive,” said Howard. His efforts were instrumental in revising the “Minneapolis
Minnesota produces a historic, rare outcome at state capitol
“The coalition views the dynamics in the upcoming legislature as a generational opportunity to accomplish true bipartisan work for the betterment of Minnesota,” said Foster. “As we’ve seen across the country, any time that housing policy initiatives are voted on as stand-alone pieces they receive strong bipartisan votes. We can do the same in Minnesota.”
The Minnesota Legislature is scheduled to begin the 2025-2026 session on January 14, 2025.
GOP earns full control of federal government
Following the 2024 election, both chambers of Congress and the White House will be under Republican control for the first time since 2018.
While President-elect Trump did highlight housing affordability as a top issue during the campaign, he was light on specifics on how his proposals would help reduce the costs of housing.
“We’re going to open up tracks of federal land for housing construction,” he said in August. “We desperately need housing for people who can’t afford what’s going on now.”
During the first Trump administration, he signed an executive order, “Eliminating Regulatory Barriers to Affordable Housing: Federal, State, Local and Tribal Opportunities.” President Biden also highlighted the need to build more housing over the past four years.
Some of Trump’s proposed policies include eliminating regulations and permit requirements that add unnecessary costs to new homes, opening up portions of federal land for housing construction and pressuring the Federal Reserve to lower interest rates.
Additional proposed policies from Trump that could impact housing production and affordability are mass deportations and tariffs. Though he has consistently talked about finding solutions to the housing crisis, the impact of these proposals remains to be seen.
2040 Comprehensive Plan,” setting the stage for future landuse and zoning legislation.
Mark Foster, vice president of legislative and political affairs at Housing First Minnesota, commended their efforts.
“We thank Sen. Port and Rep. Howard for their tireless efforts to move towards allowing for more homeownership opportunities for all Minnesotans,” said Foster.
The awards were presented during Housing First Minnesota’s annual Building Industry Gala at Mystic Lake Center in October, celebrating excellence in building and remodeling homes for Minnesotans.
Rep. Michael Howard accepts a 2024 Legislator of the Year award at Housing First Minnesota’s annual awards gala.
Panel discusses growing housing crisis
Minnesota is grappling with a deepening housing shortage, a critical issue examined in a recent panel discussion hosted by the Sensible Land Use Coalition (SLUC), which brings together industry professionals to address Minnesota’s housing
market challenges. Industry leaders and experts gathered to discuss the state’s housing deficit and strategies to overcome it.
The panel featured Nick Erickson, senior director of housing policy for Housing First Minnesota; Evan Roberts, assistant professor at the University of Minnesota; and Cecil Smith,
president and CEO of the Minnesota Multi Housing Association. Their discussion outlined the scope of the housing shortfall in the state and potential solutions.
According to Erickson, housing production in Minnesota has never fully recovered from the Great Recession and has been declining steadily since peaking early in the COVID-19 pandemic, resulting in a limited number of available homes that are becoming increasingly unaffordable.
“To return to pre-pandemic affordability, home prices would need to drop by 30%, household incomes would have to rise by 60% or the average 30-year mortgage rate would need to fall by 450 basis points,” Erickson explained.
One potential solution discussed was zoning reform at the state level, which advocates believe could provide more housing options and improve affordability for both buyers and renters. Roberts emphasized the importance of diverse housing types, noting, “The type of housing we are allowing to be built is crucial. It is part of a broader conversation about the kind of state we want to be.”
Erickson also highlighted the role of local governments in contributing to the housing supply crisis. “Since 2018, the state has deferred to local governments on housing matters, and during that time, the housing deficit has doubled,” he said. However, local entities have also been instrumental in addressing the problem.
Last year, a coalition of housing industry members, community partners, and elected officials formed to advocate for state-level zoning reform. This diverse group, including some local government leaders, aims to ease restrictions and increase housing production.
The coalition is expected to continue pushing for reforms during the 2025 legislative session, as Minnesota’s housing crisis remains an urgent concern.
Industry leaders convened at the Sensible Land Use Coalition’s panel discussion to address Minnesota’s housing crisis. Experts outlined challenges and solutions such as zoning reform and increased housing diversity.
Lennar expands to Rochester with three new residential communities
Lennar, one of the nation’s largest homebuilders, has announced a significant expansion into Rochester, MN, launching three new communities in response to the city’s growing housing demands. The new developments — The Ponds of Highland Hills, Hadley Hills and Essex Estates — are strategically located, catering to the needs of a rapidly expanding population.
Lennar is the first national builder to expand beyond the Twin Cities market. With Rochester experiencing the strongest job growth in Minnesota, Lennar’s expansion aims to alleviate the area’s housing shortage.
“Rochester is attracting new residents, and the housing market has not been able to keep up,” said Bill Burgess, division president of Lennar’s Minnesota in a press release. “We are excited to grow alongside Rochester and meet the demand with thoughtfully designed homes that meet the diverse needs of such a vibrant community.”
Each community will feature, two-story single-family homes. Homes will range from 2,271 to 2,786 square feet, with prices beginning in the low $500,000s.
Each community is minutes from downtown Rochester and surrounded by parks, sports complexes, and popular dining and entertainment destinations. Lennar states the addition of these homes aligns with the area’s needs, providing options for residents seeking high-quality, move-inready homes near the city’s health and recreation centers.
CMBA tackles housing affordability, regulatory challenges in Greater Minnesota
In October, Central Minnesota Builders Association (CMBA) participated in a virtual meeting dedicated to housing affordability challenges in Greater Minnesota. Other participants included the Coalition of Greater Minnesota Cities, Rep. Larry Kraft, Sen. Lindsey Port and Rep. Michael Howard. “We’ve heard it from employers across our communities,” said Wanda Schroeder, executive director of CMBA. “There is both an affordability and inventory crisis in the St. Cloud region, and this makes it harder for employers to attract and retain talent.”
According to a report issued by “Up for Growth” last year, the slowdown in construction is harming housing affordability and access in the St. Cloud region. The area’s housing deficit is 1,652 units, raising costs on both existing homes and apartments, and leaving 49% of area renters cost burdened.
CMBA also sent a letter to legislators highlighting the need for statewide land use reform in the 2025 legislative session. The October meeting was the third in an ongoing series organized by legislators.
Identifying code impacts on homebuilding costs
CMBA responded to a request from the city of Cokato and the Coalition of Greater Minnesota Cities (CGMC), seeking more information about how the state’s building code and energy code are impacting St. Cloud region homebuilding costs. CMBA gave them an extensive list of impacts and suggestions for changes that could help ease the cost of building.
The list included concerns about land use rules.
“In the areas with the greatest need (our St. Cloud tri-county area, Duluth, Rochester and the Twin Cities), the system is not designed to approve new projects at the scale required,” CMBA stated in its response.
CMBA also highlighted the need for statewide building code enforcement, mitigating building permit fees by making them square footage-based, legislative review of any code change that adds $1,000 or more to the cost of a home,
banning cosmetic design requirements in planning laws and putting all building-related codes on the same six-year cycle.
CMBA also suggested a number of changes in code-specific and code-adjacent issues, including repealing the 2024 energy code, backing off new green energy mandates, easing requirements for electric vehicle (EV) chargers and moving plumbing code rulemaking to the Department of Labor and Industry (DLI).
“There are clearly regulatory impacts that state and local governments can help address and mitigate,” stated Steve Gottwalt, CMBA government affairs consultant, in the response. “Without action to significantly improve this situation, we will continue to fall behind in terms of both supply and affordability.”
Seeking clarity on independent contractor rules under new law
CMBA recently hosted a meeting with top DLI officials regarding the implementation of the state’s new “Worker Misclassification” law which became effective July 1st. CMBA members are concerned about the law’s new requirements for determining who is an independent contractor vs. employee.
“Our members want to comply,” said Wanda Schroeder, CMBA’s executive director. “But they need clear information about the law and how it will be enforced.”
Guest presenters included DLI Labor Standards Division director, Jessica Grosz, and DLI associate general counsel, Adam Case. They ran through a slide presentation outlining the new law, and more details of the new 14-point test determining an independent contractor.
“We certainly appreciated DLI joining our meeting to try and explain the lack of clarity in implementing this new independent contractor law,” said Gottwalt. “But they did not really settle the concerns our members have about how this new law works, how it will practically impact their businesses and how to comply.”
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Housing market report
Despite mortgage rates beginning to increase, Twin Cities homebuilding was strong in October. Metro homebuilders pulled 664 permits for single-family homes – a 13% increase over the same time last year. Multifamily construction, however, posted its first year-over-year increase since February. Builders pulled permits for 354 multifamily units in October, which is a 6% jump in activity from last year. There were 675 permits issued for a total of 1,018 housing units during the four comparable weeks in October, according to the Keystone Report.
Experts unpack successes and setbacks in housing policy reform nationwide
Different approaches to planning, zoning and land use policies enacted by state, local and regional governments have different influences on housing production. Over the past few decades, laws, ordinances, and planning documents have been rewritten to encourage more housing production. Experts from across the nation discussed these changes and their impact on housing affordability in a panel hosted by the Federal Reserve Bank of Minneapolis.
The panel featured Jeff Levine of the Department of Urban Studies and Planning at Massachusetts Institute of Technology, Mary Kyle McCurdy of 1000 Friends of Oregon,
Katherine Payne of the Fair Share Housing Center and Jenny Schuetz of the Brookings Institution. They discussed methods that have been successful, as well as policies that have not been effective at increasing housing production.
One example of an unsuccessful policy approach comes from California.
“The reporting requirements are enormously onerous, this is a boondoggle for land use consultants in California who get to write these plans every 8 years, and it’s not actually resulting in building more housing,” said Schuetz.
In Oregon, housing advocates aim to make it at least as
easy to build multifamily housing as it is to get approved to build single-family housing. There has been some success in Portland, which has adopted its own density bonus policies along with middle housing reform.
The panelists also emphasized the power and importance of coalition building, as well as the bipartisan nature of both supporters and opposition to zoning and land use reform.
However, there is not a single or uniform solution to the housing crisis in the United States. “Land use planning can’t deliver the production of affordable housing by itself, but it has to set the table for it to happen,” McCurdy said.
Panelists emphasized the importance of coalition building, as well as the bipartisan nature of both supporters and opposition to zoning and land use reform.
Mortgage applications tick up as borrowers face higher costs
Mortgage applications in the United States experienced a slight uptick in the first week of November, despite the 30year fixed-rate mortgage nearing 7%. The Mortgage Bankers Association (MBA) reported a 0.5% increase in its Market Composite Index, which measures mortgage application volume, compared to the previous week.
The recent rise in mortgage rates follows the Federal Reserve’s 25 basis point interest rate cut. Despite higher borrowing costs, some homebuyers are re-entering the market.
“Applications increased for the first time in seven weeks,” said Joel Kan, MBA’s Deputy Chief economist. Loans backed by the Federal Housing Administration (FHA) and Veterans Affairs (VA) were driving the uptick.
• Purchase Applications: The Purchase Index, indicating applications for home purchases, rose by 1.9% from the prior week.
• Refinance Applications: The Refinance Index declined by 1.5% during the same period.
• Interest Rates: The average contract rate for 30-year fixed-rate mortgages on homes priced at $766,550 or less increased to 6.86%, up by 5 basis points from the previous week. A separate survey by Mortgage News Daily reported the 30-year rate averaging 7.02% as of November 12.
The housing market remains attentive to potential impacts from the new administration and future Federal Reserve policies. While elevated mortgage rates pose challenges, the recent increase in applications suggests a resilient demand among prospective homebuyers.
The National Association of Home Builders (NAHB) reports a modest increase in builder confidence for October 2024, despite ongoing affordability concerns. The NAHB/ Wells Fargo Housing Market Index (HMI) rose to 43, up from 41 in September, marking the second consecutive month of gains.
NAHB Chairman Carl Harris noted that while housing affordability remains low, builders are optimistic about market conditions in 2025. He emphasized the importance of policymakers focusing on supply-side solutions to address the housing crisis.
Robert Dietz, NAHB’s chief economist, highlighted that, despite the Federal Reserve’s easing cycle, many prospective buyers are waiting for lower interest rates. He forecasts uneven declines in mortgage rates in the coming quarters, which could boost housing demand but may strain building lot supplies due to tight lending conditions.
The HMI survey also revealed that 32% of builders cut prices in October, consistent with September’s rate. The average price reduction returned to the long-term trend of 6%
NAHB/Wells Fargo Housing Market Index (HMI)
Source: NAHB
after a dip to 5% in September. Additionally, 62% of builders offered sales incentives, a slight increase from 61% in September.
All three HMI components saw gains in October:
• Current sales conditions rose two points to 47.
• Sales expectations for the next six months increased four points to 57.
• Traffic of prospective buyers gained two points to 29. Regionally, the three-month moving averages for HMI scores were:
• Northeast: up two points to 51
• Midwest: up two points to 41
• South: steady at 41
• West: up three points to 41
These figures suggest a cautiously optimistic outlook among builders, even as affordability challenges persist. The industry continues to navigate a complex landscape, balancing the need for increased housing supply with the realities of current economic conditions.
New opportunities and incentives for Minnesota’s energy-efficient homebuilders
Homebuilders in Minnesota know that energy efficiency can be a key selling point for new homebuyers. Statewide, at least 547 homes and apartments have earned the Environmental Protection Agency’s (EPA) trusted ENERGY STAR certification, which helps
consumers choose homes that are designed and built with energy efficiency in mind.
Two significant ENERGY STAR program updates that may interest Minnesota’s homebuilders includes:
• A federal tax credit is now available for homes that earn the ENERGY STAR.
• The EPA recently launched a new certification program, ENERGY STAR NextGen, that recognizes homes and apartments equipped with leading-edge, efficient electric technologies and electric vehicle charging capabilities.
As part of the Inflation Reduction Act (IRA), the § 45L New Energy Efficient Home Credit was updated and extended through 2032. For homes and apartments acquired on or after Jan. 1, 2023, earning the § 45L tax credit requires certification to an eligible version of the ENERGY STAR Residential New Construction program.
The § 45L tax credit is available for:
• Single-Family Homes: $2,500 available for homes certified to eligible ENERGY STAR .
• Single-Family New Home (SFNH) program requirements.
• Manufactured Homes: $2,500 available for homes certified to eligible ENERGY STAR Manufactured Home (MH) program requirements.
• Multi-family Homes: $500 available for homes certified to eligible ENERGY STAR .
• Multi-family New Construction (MFNC): A larger tax credit of $2,500, available when existing wage and program requirements are met.
ENERGY STAR NextGen builds on the 30-year legacy of the EPA’s ENERGY STAR program and is designed to encourage the adoption of advanced, efficient electric technologies in new homes. These technologies include an electric heat pump, heat pump water heater, cooking appliance, and residential vehicle charging.
ENERGY STAR NextGen is already gaining traction in Minnesota and across the country. In Minnesota, builders like GreenSmith Builders uses leading-edge green and smart home technologies to build homes to zero-energy, zero-carbon, and zero health impact standards.
GreenSmith’s standard home features rooftop solar panels, battery storage, electric car
chargers, induction cooktops, and the latest heat pump and smart home technology. The goal is to help to lower the overall cost of homeownership by building to the following third-party certified rating standards: HERS, ENERGY STAR, EPA Indoor airPLUS and Zero Energy Ready Homes.
“Forty percent of our energy use comes from buildings. That’s a significant contributor to climate change,” said Aaron Smith, CEO of GreenSmith Builders. “Ultimately, we’re trying to transform an industry that has been doing things the same way for more than 100 years. We want to make electric, resilient, decarbonized and net-zero homes the norm.”
All ENERGY STAR NextGen homes and apartments also qualify for the § 45L tax credit. Xcel Energy also offers several programs and rebates for new construction builders committed to energy-efficient buildings.
For more information, visit www.energystar. gov/45LTaxCredits to review the FAQ section, or visit energystar.gov/ NextGenHomes.
HELP US
LEGALIZ E NEW STARTER HOMES AND PROTECT HOMEOWNERSHIP FOR FUTURE GENERATIONS.
Industry excellence celebrated at annual awards gala
Housing First Minnesota revealed the winners of some of the top industry honors at its annual Building Industry Gala (BIG Night) on Oct. 25 at Mystic Lake Center. 800 builders, remodelers, and trade partners attended the an -
members of the industry including the coveted Builder of the Year, Remodeler of the Year and Associate of the Year awards, along with many others. A slate of new awards was introduced at this year’s program including honors in
2024 FALL AWARD RECIPIENTS
recognizing firms that exemplify the highest standards of business as judged by their peers and customers.
“We are proud to honor the achievements of this year’s award recipients, who continue to set the benchmark for
Larkin Hoffman
LENNAR
HOMES
Green Path Conference showcases efficient, sustainable building practices
Minnesota’s Green Path hosted a full house of more than 80 industry professionals at its annual Green Path Building Conference on Nov. 14 in Roseville. Residential contractors, remodelers and other members of the industry attended the half-day event, all focused on advancing energy-efficient and environmentally friendly building techniques. Attendees gained valuable insights into utility rebate
programs from Xcel Energy and CenterPoint Energy, explored continuous insulation methods and examined key components of energy-efficient home construction. A panel of energy raters further discussed practical changes to improve a home’s energy efficiency while delivering strong investment returns.
“The annual Minnesota Green Path Building Conference
highlights our industry’s ongoing dedication to sustainable and responsible building practices,” said Tom Gavaras, vice president of events and workforce initiatives at Housing First Minnesota. “This event equips our members with the tools and knowledge to adopt green solutions that positively impact both our communities and the environment.”
Congratulations to Peter Coyle who was honored with the Robert L. Hanson Lifetime Achievement Award.
James Hardie fiber cement products are Engineered for Climate . For ® ® uncompromising performance, our HZ5 siding and trim are specifically ® designed to resist shrinking, swelling and cracking
looking beautiful longer – no matter what nature brings.
James Hardie fiber cement products are Engineered for Climate . For ® ® uncompromising performance, our HZ5 siding and trim are specifically ® designed to resist shrinking, swelling and cracking even after years of wet or freezing conditions. A James Hardie exterior can help keep your homes looking beautiful longer – no matter what nature brings.
Contact a sales representative:
Contact a sales representative: Kevin Morel | (612) 323-6358
a sales representative: Kevin Morel | (612) 323-6358 kevin.morel@jameshardie.com
Kevin Morel | (612) 323-6358
kevin.morel@jameshardie.com
Contact a sales representative: Kevin Morel | (612) 323-6358 kevin.morel@jameshardie.com
Contact a sales representative: Kevin Morel | (612) 323-6358 kevin.morel@jameshardie.com
Contact a sales representative: Kevin Morel | (612) 323-6358 kevin.morel@jameshardie.com
We are thankful for our decades long relationship with
INDUSTRY GIVES BACK
Veteran homelessness in Hennepin County reaches ‘functional zero’
Earlier this fall, state officials announced Hennepin County had reached functional zero for veteran homelessness.
Lt. Gov. Peggy Flanagan made the announcement on Oct. 15 and was joined by Sen. Tina Smith; Sen. Amy Klobuchar; Neil Doyle, director of veteran services for Hennepin County; and other state and Hennepin County officials.
A functional end to veteran homelessness in Hennepin Country means that there are resources in place that allow any veteran who is homeless to have a safe place to live, making it so individual experiences of homelessness for veterans are brief, scarce and noncyclical.
“Reaching functional zero for veteran homelessness is a monumental achievement for Hennepin County.
This milestone is a testament to the tireless work of our dedicated partners, our community and the veterans themselves,” said Sofia Humphries, executive director of the Housing First Minnesota Foundation, which partners to build housing for veterans experiencing homelessness across the state. “It’s a historic moment that shows what’s possible when we come together with a shared purpose: ensuring every veteran has a permanent, stable place to call home. While today we celebrate, we are also more committed than ever to doing our part to ensure that no veteran ever must face homelessness again.”
This announcement comes as the Housing First Minnesota Foundation completes three Housing for Heroes homes in partnership with the Minnesota Assistance Council for Veterans (MACV) and build partner Lennar in North Minneapolis this year. These three homes brings the total number of Housing for Heroes homes to 14, with 11 of these homes located in Hennepin County.
“We are honored to stand alongside Housing First Minnesota Foundation and Lennar to offer these veterans a
place where they can begin their next chapter with dignity and security,” said Jon Lovald, COO at MACV. “Each of these homes reflects the strength of our community’s commitment to supporting those who have served our country.”
In celebrating this monumental achievement for Hennepin County, the Housing First Minnesota Foundation remains steadfastly committed to the ongoing fight to end veteran homelessness across Minnesota.
Fall Artisan Home Tour showcases Minnesota’s finest craftsmanship
The Fall Artisan Home Tour, held over three weekends in October, once again brought Minnesota’s luxury homebuilding and design community into the spotlight. The event, which featured 20 exquisite custom-built homes, drew an enthusiastic crowd with more than 33,000 home visits.
Attendees were treated to a showcase of masterful craftsmanship and high-end design, with homes displaying a variety of standout features. From expansive open-concept floor plans to energy-efficient innovations and the latest home technology, each property offered a glimpse into artisan living in Minnesota. Kitchens equipped with top-of-the-line appliances, spa-like primary suites, and extravagant outdoor living spaces were just some of the highlights that wowed visitors.
As the industry continues to evolve, the Fall Artisan Home Tour remains a pillar event for showcasing the innovation and craftsmanship that define Minnesota’s highend homebuilding scene.
Housing industry unites for Give to the Max Day
On Nov. 21, Minnesota’s housing industry came together for a meaningful cause during Give to the Max Day, the state’s annual celebration of philanthropy. Builders, remodelers and industry partners joined forces to support the Housing First Minnesota Foundation, raising funds to advance the Foundation’s mission of providing safe housing for those in need.
The Housing First Minnesota Foundation, the charitable arm of the state’s homebuilding community, has long been dedicated to building and renovating transitional housing for Minnesotans and veterans experiencing homelessness. Through strategic partnerships and the generosity of the industry, the Foundation addresses housing insecurity, offering hope and stability to some of Minnesota’s most vulnerable populations.
This year’s Give to the Max Day saw an outpouring of generosity, with numerous companies and individuals making substantial contributions totaling more than $20,000. Builders and remodelers rallied their teams to participate, showcasing the industry’s collective commitment to making a difference.
“The support we received from our industry partners on Give to the Max Day was incredible,” said Sofia Humphries, executive director from the Housing First Minnesota Foundation. “These contributions allow us to continue building homes and changing lives, and we are deeply grateful for the ongoing commitment of Minnesota’s building community.”
As housing affordability and homelessness continue to challenge the state, the efforts of the Housing First Minnesota Foundation — and the industry’s strong support — highlight the powerful impact that collective action can have.
The tour served as an chance for builders to connect with potential clients and as a valuable networking opportunity, providing insight into current design trends and customer preferences.
THE FUTURE OF BETTER BUILDING IS NOW.
Every day our team of professionals is driven to be the best and deliver for our customers. We’re on a mission to develop next-generation solutions that accelerate, optimize and transform the homebuilding industry.
Through the acquisition of Paradigm, a building industry technology leader, Builders FirstSource is uniquely positioned to lead the digitization of our fragmented industry. Together, we will help homebuilders drive e iciency by reducing project costs and increasing labor productivity across the country.
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Partnership delivers three new transitional homes for veterans
A ribbon-cutting event in North Minneapolis marked the completion of three new homes for veterans, thanks to a partnership between the Housing First Minnesota Foundation, Lennar and the Minnesota Assistance Council for Veterans (MACV). The ceremony, held on Oct. 22, celebrated the organizations’ continued collaboration to address veteran homelessness in Minnesota.
These new properties are the latest additions to the Housing for Heroes program, bringing the total to 14 homes built since the partnership began. Each home provides transitional housing for 8 to 10 veterans annually, with residents staying up to two years while receiving critical support services.
Veterans work on mental health and recovery, gain job skills and overcome barriers to securing permanent housing.
More than 60 people attended the event, including representatives from the partnering
organizations. Speakers included Jon Lovald, COO of MACV, and Thiago Silva, a construction manager from Lennar, who expressed their commitment to the cause and excitement for the ongoing projects.
“These homes provide stability and a path toward healing for veterans and their families,” said Lovald. “We are proud to be part of a mission that changes lives.”
The Housing for Heroes initiative continues to make a significant impact, with plans to expand efforts in the seven-county metro area and greater Minnesota in 2025. The partnership relies on grant funding and contributions from trade partners to bring these projects to life.
With ongoing collaboration, Housing First Minnesota Foundation, Lennar and MACV aim to provide more veterans with the resources they need to rebuild their lives and achieve stability.
Industry strengthens communities
Highmark Companies partners with Warrior Dog Rescue
Highmark Companies recently teamed up with Warrior Dog Rescue, a Savage-based nonprofit dedicated to rescuing and rehabilitating dogs in need. Warrior Dog Rescue works to save abandoned, abused, and neglected dogs, providing them with care and finding them loving adoptive homes. Their mission reflects the belief that all dogs deserve the love and companionship of humans.
Highmark’s leadership, known for its commitment to community involvement, welcomed the opportunity to support this vital organization. The partnership culminated in a heartwarming visit from Warrior Dog Rescue to the Highmark office, where staff had the chance to meet the rescue dogs and learn more about the nonprofit’s efforts.
Cardinal Homebuilders hosts annual fundraiser for American Cancer Society
Cardinal Homebuilders recently hosted its 17th annual spaghetti dinner fundraiser, continuing a beloved tradition of supporting the American Cancer Society. The event brought together family, friends, coworkers and clients in a united effort to fight cancer.
“It’s been a labor of love,” said Tony Wiener of Cardinal Homebuilders. Over nearly two decades, the event has become a cornerstone of the company’s community involvement, raising
awareness and funds for the American Cancer Society’s mission to improve the lives of cancer patients and their families through advocacy, research and support.
This year’s dinner raised an impressive $60,000, contributing to vital efforts to prevent, detect, treat and help people survive cancer. Cardinal expressed heartfelt gratitude to all who attended and supported the cause, reinforcing their commitment to making a difference in the fight against cancer.
Twin Cities Habitat for Humanity launches their largest development to date
From Sept. 29 to Oct. 4, Twin Cities Habitat for Humanity welcomed more than 4,000 volunteers to work on 30 homes for the Jimmy & Rosalynn Carter Work Project. The weeklong event launched construction on The Heights in St. Paul, the organization’s largest project to date.
The Carter Work Project, which has traveled to 14 countries, brings together thousands of volunteers, celebrities, elected officials and other VIPs to address the critical need for affordable housing.
“The Heights” will serve as a lasting legacy of the Carter Work Project’s impact on the Twin Cities, addressing housing challenges and bringing the community together in support of Habitat for Humanity’s mission.
Lennar, Housing First Minnesota Foundation and MACV unveiled three new homes for veterans in Minneapolis in October. | Nordy Photography
Minneapolis mayor eases regulatory burden for downtown developers
The continued fallout from COVID-19 lingers as many office buildings in downtown Minneapolis remain empty. Companies nationwide have continued their work-from-home policies, and many are opting to sell their space or downsize it. This has major implications for the city’s budget, which depends heavily both on sales taxes and commercial property taxes.
In an effort to revitalize downtown, Minneapolis Mayor Jacob Frey signed an ordinance in September that will ease the regulatory burden on developers who want to turn empty office buildings into apartments. These projects will only require approval by city staff and will not be required to hold public hearings; the plans will also be exempt from traffic studies and the inclusionary zoning ordinance requiring developers to designate a portion of apartments as “affordable housing” or be subject to substantial fees instead.
“Time is money and uncertainty is money,” Frey said. “If we can cut down on the uncertainty and cut down on the time frame that it takes to get this done, more owners and developers will choose to make that shift.”
Pulte Homes plans to bring hundreds of homes to Waconia in new development
Pulte Homes has proposed a multi-year, multi-phased development project to Waconia that would bring over 550 single-family and multifamily units to the city. In the first phase, Pulte plans to build out 339 single-family homes on a 241-acre site. Pulte also plans to develop 216 multifamily units and about 45,600 square feet of retail and commercial space on the site in a later phase of the project. Pulte’s proposal is currently under a mandatory environmental review. Based on Metropolitan Council growth forecasts, Waconia would need about 200 additional housing units per year through 2040 to meet the city’s needs.
ON THE PATH TOWARD A MORE SUSTAINABLE FUTURE
Funding for school construction projects saw mixed results on election night
Districts had varying results at the polls on election night as voters approved about half of the bond referendum questions for construction projects. The Minnesota School Boards Association reported that seven of the 13 districts with bond questions on the ballot for building or maintenance projects won voter approval for at least one question on election day.
Northfield came out on top with voters agreeing to pay more than $120 million for projects, including a major high school expansion and renovation. Conversely, Fergus Falls voters rejected a nearly $49 million request for a new grades 3-5 school and Blue Earth Area residents voted against a $66.8 million request for a new elementary school and high school improvements. The cities of Chanhassen and Richfield voted to approve local option sales tax funding for specific projects. Chanhassen will be moving forward with its plans to build a $40 million community center, and Richfield residents supported $80 million of park and recreation projects, including a new community center, improved Veterans Park facilities and a new Wood Lake Nature Center building.
LEVEL #1: MN GREEN PATH ENERGY TESTED
Energy-tested homes are evaluated by a third-party, independent RESNET rater to provide a Home Performance Report and HERS Index Score.
LEVEL #2: MN GREEN PATH ADVANCED CERTIFIED:
The homes that achieve this mid-level certification meet rigorous energy testing standards and incorporate additional green features.
These builders have one or more homes that achieved advanced certification in 2024: Cuddigan Custom Builders, LLC; D.R. Horton, Inc. – Minnesota; Eternity Homes, LLC; Hanson Builders, Inc.; Lennar; McDonald Construction Partners, LLC; RCC Construction & Design; and Stonegate Builders
LEVEL #3: MN GREEN PATH MASTER CERTIFIED:
The top level of green building, homes at this level exceed rigorous standards, showcasing the highest commitment to energy efficiency.
These builders have one or more homes that have recently achieved master certification: Custom One Homes; Hagstrom Builder; Paltrin, LLC and Michels Homes
PHOTO: PULTE HOMES
PHOTO: MN REFORMER
PHOTO: NORTHFIELD PUBLIC SCHOOLS
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