Rents continue to rise in the Twin Cities, creating more demand for affordable housing. Agate Housing and Services Executive Director Kyle Hanson says this is a problem because there is already an extreme shortage of affordable units in the metro.

Rent for a one-bedroom Minneapolis apartment increased 14% from September 2022 to September 2023, according to research done by the nonprofit Housing Link. Rent increased 9% and 4% for a two- and a three-bedroom apartment, respectively. This means families often need to spend a greater proportion of their income on rent. Minneapolis wage and income growth, according to data from the Bureau of Labor Statistics, grew only 3.4% over the same timeframe.

“[Rent has] gone up, which puts increasing pressure on families to be able to afford rent, even if they are gainfully employed,” Hanson said.

On top of the higher rent, the availability of affordable housing is dire, according to Hanson. Statewide data from a May report by Minnesota Housing suggests that 29% of all renters make 30% or less of the area median income. But for every 10,000 units being produced in the state only 100, or 1%, are made affordable for those at 30% AMI.

John Patterson, the research director for Minnesota Housing, said this mismatch likely extends to the affordable housing dynamics in the Twin Cities metro and is leaving renters with few options.

“Modest-income renters, which is a majority of them, are just seeing the housing produced isn’t affordable to them and they’re stuck with what’s already in the market,” he said.

This lack of available and affordable units puts an increased demand on groups like Agate and Aeon, who develop and manage properties with affordable units. But Hanson said the process for financing and approving affordable housing projects does not move fast enough.

Being unhoused in the winter is dangerous and sometimes fatal. With winter approaching, Hanson said Agate is starting to feel more pressure in their work. The group recently closed on the Metro Inn Motel in a deal with Hennepin County. Hanson said they are trying to open it up as quickly as possible.

“We are trying every day to match people with units, with housing,” he said. “There is some urgency when it comes to winter, it gets to be crunch time about this time of the year where we realize that it’s dangerous and actually deadly for people to be outside in the elements.”

Aeon Chief Real Estate Officer Laura Russ said the group focuses a lot on naturally occurring affordable housing units. She said when the winter approaches, they often must ensure that utilities are properly working at the apartments, especially heat. If residents are without heat in the winter, Russ said, it’s always an emergency.

The work extends beyond trying to make sure quality, affordable housing is available, turning toward more temporary measures for keeping people off the street, Hanson said, including opening more space in shelters.

But, Hanson said, there’s not too much the group can do to provide extra shelter to those in need.

“The reality is there isn’t a whole lot more that we can do within what we actually already do every day,” he said.

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