The Fed's Take on Housing, Rent Control, and More

Today I’m going to encourage you to set aside some time to listen to someone else, on the topic of housing.  In late March, The Minneapolis Fed Chair, Neel Kashkari, participated in a conversation moderated by Minnesota Housing Partnership’s Executive Director Anne Mavity. The conversation was fascinating and enlightening, as always, and I was particularly captivated by Chair Kashkari’s comments on barriers to building sufficient housing to meet the needs of Minnesotans.  He describes it as, fundamentally, a supply problem: “we are simply not producing enough units, of all types, to meet the needs of families across our region.” And supply really matters for affordability. Based on research conducted with the Itasca Group, Kashkari could tell us that we need to produce 18K more units/year through 2030. That’s 30% above the current run rate. The key is to motivate private developers to do so. What gets in the way of that?
 
Kashkari went on to talk about extraordinary barriers, from communities resisting more people moving in, to regulations that make new development harder. The key regulatory barrier he discussed was rent control. He shared a chart comparing affordability to housing production, on which were plotted key regions within the 9th District. Key cities with rent control in place, such as San Francisco, Portland, and Boston (and MSP was in the mix as well), all reflect high cost/low supply. As Kashkari put it, rent control is SUCH an inhibitor to new supply coming online: “if we actually want to move the needle for working class families across Minnesota, we need to unleash a lot more supply. And every policy that I would look at, I would judge on, ‘is this going to help supply or not?’ And if it’s going to help supply, I’d give it serious consideration. If it’s going to be a barrier to supply, I’d be more cautious about that.”
 
The conversation continued across a wider range of topics, but this first really got my attention. Again, I encourage you to listen in!
 
See you in the trenches,
B