Minneapolis city officials are saying it, a St. Paul neighborhood group is saying it, and housing advocacy groups are saying it: the Twin Cities are in an affordable housing crisis.

That might come as a surprise to some. After all, this isn’t San Francisco, overrun with wealthy tech bros and with limited room to expand. To be sure, the Twin Cities are more affordable than a lot of coastal cities.

In fact, overall, data on housing affordability in Minneapolis and St. Paul indicates that the portion of income people spend on housing is actually going down.

So does that mean talk of a crisis in housing affordability is overblown? Not quite. Because what that overall number fails to show is that even as housing becomes more affordable for some, it’s becoming less so for others.

Measuring affordability

First things first: how do we know whether housing is unaffordable or not? The standard measure for whether housing is affordable or not is if a household is spending 30 percent or more of its income on housing expenses.

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That means a household making $30,000 a year shouldn’t spend more than about $750 a month on an apartment or house and utilities. A household making $100,000 a year shouldn’t spend over $2,500. If they do, they’re considered “cost-burdened.”

The 30 percent metric evolved out of federal housing programs, beginning in 1937, when the United States National Housing Act created the public housing program and set limits on the amount families could make to qualify for it, according to the U.S. Census Bureau. Eventually, a share of income — first 25 percent and then 30 percent— was adopted as a standard. Since 30 percent became a widely used benchmark for determining how much households would spend on rent and still be able to pay for their other expenses, it was adopted in the mainstream housing market.

But is a standard developed 80 years ago still relevant today? Not everyone thinks so. Critics dismiss the 30 percent benchmark as all but meaningless because it doesn’t account for the differences in other expenses households have, be they medical or transportation costs. Plus, they say, there’s no reasonable expectation that two households should aim to spend the same amount of their income on housing. Generally, poorer people spend a larger share of their income on rents or mortgages, while high-income people spend less.

“Clearly, Bill Gates doesn't spend 30 percent of his income on housing,” said David Bieri, an associate professor of urban affairs at Virginia Tech.

So what alternative measures are out there? One general way to think about housing affordability, Bieri said, is to ask whether or not a household could stay in its housing for the average duration of unemployment in the area. If it could, the housing might be considered affordable. If not, that household might be cost-burdened. But this would be complicated to measure in a comprehensive way for all households in a given area.

Sticking to numbers that are easier to measure, another metric, preferred by some, is the H+T index, calculated by the Center for Neighborhood Technology. H+T starts with a regular income threshold and adds in transportation costs, which it says are most households’ second-largest expense.

According to this measure, housing is affordable if households spend no more than 45 percent of their income on housing and transportation. When you factor in transportation like this, some parts of the suburbs, where households would presumably spend more on transportation, become less affordable.

In Minneapolis, the average moderate income household, making $55,000 a year, spends 44 percent of its income on housing and transportation costs — just under the 45 percent threshold — while in St. Paul, the average is 43, according to this index.

In San Francisco, a moderate income household makes $65,000 and spends 50 percent of that on housing and transportation. In New York, where a moderate-income household makes nearly $54,000, the figure is 47 percent.

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Compared to other cities, this measure makes the Twin Cities look relatively affordable for moderate income households. Even in Houston and Detroit, the average household spends a higher share of its income on housing and transportation than the Twin Cities, according to this index.

Who pays most in the Twin Cities

But even if the Depression-era 30 percent of income threshold is a flawed metric, it’s the one that’s most commonly used — and studied.

By the 30 percent rule, the share of Twin Cities residents who can’t afford their housing has actually gone down in recent years: from about 35 percent in 2011, to 28 percent in 2016 according to Minnesota Compass, a research division of the Amherst H. Wilder Foundation located in St. Paul. That’s still up, however, from 26 percent in 1990 and 24 percent in 2000.

But still, a seven point decline in housing unaffordability in five years seems like the opposite of an affordable housing crisis, right? Not, it turns out, if you break these figures down for different levels of income.

“Overall, housing cost burden has gone down in the Twin Cities,” said Allison Liuzzi, the director of Minnesota Compass. “But when we break it down by household income, we see some different patterns.”

Cost-burdened Twin Cities households by annual income, 2011-2016 Households that spend more than 30 percent of income on housing expenses are considered "cost-burdened." Source: U.S. Census Bureau, compiled by Minnesota Compass

For the Twin Cities’ poorest households, the rate of unaffordable housing has stayed steady — and high. More than 4 out of 5 households earning less than $20,000 per year are cost burdened when it comes to housing.

The two wealthiest groups of households in Wilder’s data, households making between $50,000 and 74,999 per year and those making $75,000 per year or more have seen the share that are cost burdened decrease between 2011 and 2016, from 29 percent to 23 percent and from 8 percent to 4 percent respectively.

But there’s one group of households that has seen their ability to afford housing actually decline — the households earning between $20,000 and $34,999. In 2011, 66 percent of these households were cost-burdened. In 2016, that figure was 72 percent.

Struggling to pay rent

It’s clear then, that even though overall Twin Cities affordability has improved over the last five years, for some households’ housing is getting less affordable. What’s behind this discrepancy?

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One explanation is that there is a lot more competition for rental housing than there used to be.

Americans’ pocketbooks took a hit during the recession, and even now, years after the economy’s recovery, wages are slow in keeping up. This helped turn more people into renters, which, in turn, put more pressure on the rental housing stock.

Today, a lot of the people who are renters might not have been in years past. A report by the Minnesota Housing Partnership looked at the dynamics of this phenomenon: In the years following the recession, an increased number of renter households were making more than $50,000 per year. Nearly half of these new renters, even, made more than $100,000, data compiled by MHP found.

Number of renter households by income, 2010 versus 2014 The number of households making more than $50,000 who were renters increased by more than 27,000 in the Twin Cities between 2010 and 2014. Source: U.S. Census Bureau, compiled by Minnesota Housing Partnership

Many of these new, higher-income renters might be homebuyers if it weren’t for a small stock of starter homes available, said Chip Halbach, the executive director of the Minnesota Housing Partnership, who has been working on housing affordability in the Twin Cities since the late-’70s.

When more people want to rent, landlords have an incentive to invest in rentals, renovate them, and jack up the rent. That can destroy what’s called “naturally occurring affordable housing,” in the industry, a term that refers to housing becoming naturally less expensive as it becomes older and less attractive to people with more money in the bank.

“So you have rents increasing across the board, but then in specific properties that are seen as ones that could be made attractive to higher income tenants, basically taking them out of buying reach of lower income people,” Halbach said.

Not only are existing rentals getting more expensive, but new rentals are pricier than they used to be, to suit this new crop of renters who want amenities — gyms, dog parks and the like. One new apartment building in Golden Valley even advertises “Minneapolis’ one and only lazy river pool experience.”

By 2015, the average rent in the Twin Cities metro rose to $1,046 per month, which MHP says is $130 more than the median renter can afford. The vacancy rate for rentals, around 3 percent, is below the 5 percent threshold often used to denote a healthy housing market.

Average Twin Cities rent, 2009-2015 The average rent for a housing unit in the Twin Cities has increased from $907 in 2009 to $1,046 in 2015. Source: Source: Marquette Advisors Rent & Vacancy Data, compiled by Minnesota Housing Partnership

It remains to be seen whether efforts to combat the shortage of affordable housing in the Twin Cities, such as an increase in the minimum wage and the just-approved Ford Site plan, which is expected to include hundreds of affordable housing units, will relieve some of the housing cost burden on Twin Cities residents.

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But Halbach said it will take more than one policy to fix the problem, from increasing the supply of housing to ensuring that older units maintain their affordability.

“It’s been a perpetual crisis, but right now we are in a wave of lack and loss of housing affordability that’s really unique,” he said.