Minneapolis appears to be a YIMBY (Yes in my backyard) success story of relaxed zoning regulations leading to increased housing production and declining rents. Its much-ballyhooed abolition of single-family zoning doesn't have much to do with this success, however.
On Tuesday, a (now-deleted) tweet went viral juxtaposing a Slate article about Minneapolis' abolition of single-family zoning with a blog post detailing rising housing production and falling rent in the city. The caption of "how it started, how it's going" leaves one with the implication that the former is responsible for the latter.
A closer look at the numbers suggests that's not true. Housing production is up, and rents do indeed appear to be falling. But the effects of Minneapolis' particular means of eliminating single-family-only zoning, and allowing up to triplexes on residential land citywide, have been exceedingly modest.
Newly legal triplexes and duplexes make up a tiny fraction of new homes being built. Other less headline-grabbing reforms appear to be doing the Lord's work of boosting housing production.
This offers important lessons for cities trying to make themselves affordable places to live. The more radically deregulatory your reforms, and the more types of reform you adopt, the more successful they'll be.
First, some background.
In December 2018, the Minneapolis City Council approved the Minneapolis 2040 comprehensive plan. The plan included a host of reforms and policy goals on everything from employment to stormwater management. The most eye-catching policy was the one legalizing two- and three-unit homes on once-single-family-only zoned land citywide.
Zoning laws—which regulate how much new housing can be built where—have been coming under increasing fire for artificially constraining housing supply, which leads more people to compete for fewer homes, thereby driving up home prices and rents. Single-family zoning, in particular, has caught a lot of flak given that it places the strictest limits on density.
Minneapolis, by being the first city to eliminate single-family-only zoning, naturally attracted a lot of attention and positive press coverage (including from me).
The city's single-family zoning reform was implemented in January 2020. But the result was not an explosion in new development.
Rather, from January 2020 through March 2022, Minneapolis approved 62 duplexes and 17 triplexes, according to data collected by the city's Department of Community Planning and Economic Development (CPED). Exactly half of the duplexes and 14 of the triplexes were built on lots that were once zoned for exclusively single-family development.
Jason Wittenberg, a planner with CPED, says the duplex and triplex numbers represent an increase from previous years. They also come at a time when the single-family development of single-family homes is falling.
Any new housing is good housing. But these two- and three-unit developments still represent a tiny fraction of the roughly 9,000 housing units the city permitted during that same time period.
One reason the city hasn't seen more triplexes and duplexes spring up is that it left in place, or only slightly modified, additional regulations that constrain how large these buildings can be, says Emily Hamilton, a housing policy researcher at George Mason University's Mercatus Center.
"Most cities have a lot of components to their single-family zoning. Limiting development to one house per lot is the headline restriction," says Hamilton. "There are also restrictions on how large that lot has to be, how large that structure has to be, how much parking is required, and how far a structure has to be from its lot line."
Minneapolis' reforms do allow for modest increases in building size for duplexes and triplexes in some zoning districts or under certain conditions. But generally, they still require these developments to fit within the same "envelope" as the single-family homes they'd replace.
"It's not enough to create the flexible conditions that are necessary to make it worthwhile to tear down a house that's already there, and build something else," says Hamilton. She recommends much more generous allowances for how much floor area new development can have.
Still, the numbers don't lie and Minneapolis is in fact seeing an increase in new housing development. According to CPED's numbers, the city issued close to 4,000 building permits annually for new housing units from 2018 through 2021. That's an increase from the 2,600 units the city was permitted on average each year from 2013 through 2017.
The city has already permitted some 2,500 units in 2022 so far, reports the Minneapolis Star-Tribune, which puts it well on its way toward surpassing last year's numbers. And that increased supply is having the predictable, desirable effect of suppressing rental prices.
Janne Flisrand, writing at local urbanist blog Streets MN, has parsed rental price data to find that median, nominal rents for one- and two-bedroom apartments are renting for less today than they did in 2018. Median prices for three-bedroom units have ticked up by 2 percent. This is in spite of record inflation and a nationwide trend of rising rents.
What's responsible for the increased housing production then?
Wittenberg credits the city's elimination of parking minimums—which had typically required one parking spot per housing unit—with facilitating increased construction of smaller apartment buildings.
The city has been chipping away at residential parking minimums since 2009. The Minneapolis 2040 plan eliminated them entirely. (The city has also adopted some rather un-free market parking policies, including parking maximums in some areas and bike parking minimums.)
Data culled by Wittenberg, and shared with Reason, shows that 19 major projects have been approved by Minneapolis' Planning Commission since parking minimums were eliminated. The median project provided .42 residential parking spaces per unit, with smaller apartment buildings typically including even less parking.
"For site constraint reasons and economic reasons, it would have been hard to park those buildings at one parking space per unit," he says. "We're pretty clearly seeing that is making a significant difference."
In January 2021, Minneapolis also implemented additional parts of the 2040 Minneapolis comprehensive plan that allows for larger, denser apartment buildings in more of the city, particularly along commercial corridors and near public transit stops. That's also helped facilitate more development, says Wittenberg.
Flisrand, on Twitter, argues that the fight over eliminating single-family-zoning sucked up most of the attention in the Minneapolis 2040 debate, thus paving the way for more impactful policies like parking minimum elimination and commercial corridor upzoning.
That political dynamic might not replicate everywhere, however. In California, for instance, the state has managed to eliminate single-family zoning—legalizing duplexes and accessory dwelling units everywhere— but failed to advance more ambitious bills to upzone near transit stops and job centers.
There are reasons one would want triplex legalization to work beyond its power as a political prop too.
The per-square-foot construction costs of a missing middle duplex or triplex are less than a larger apartment, making it desirable on affordability grounds, says Hamilton. She also says these types of units would expand consumer choice for folks who are done with apartment living but can't afford a single-family home of their own in a given area.
One also doesn't want to learn the wrong lesson that eliminating single-family zoning is the only supply increasing reform cities need to adopt.
There's a certain current of thought on the political left—represented most prominently by Rep. Alexandria Ocasio-Cortez (D–N.Y.)—that supports eliminating single-family zoning in wealthy neighborhoods while also expressing extreme skepticism of denser private, market-rate development elsewhere in the city
But legalizing the latter type of development, at least in Minneapolis's experience, appears to go a lot farther in actually producing more housing units and holding down rents.
More and more jurisdictions across the country are catching on to the fact that their zoning laws are strangling housing production and driving up housing costs, and moving to make changes.
The lesson from Minneapolis, at least, appears to be that modest reforms will produce modest results. Slashing regulation with a Randian abandon will do a better job of legalizing housing in a way that leads to actual housing production and falling prices.