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On Tuesday, February 18, 2025, the Minnesota House Housing Finance and Policy Committee convened to tackle the pressing issues of housing supply and affordability. The session featured detailed testimony from Minnesota Realtors® Director of Research David Arbit with support from Senior Vice President of Advocacy Paul Eger. MNR’s data-driven presentation provided a comprehensive look at the historical trends and current challenges affecting Minnesota’s housing market. 

Arbit’s testimony took committee members on an informative journey across a variety of metrics and indicators, explaining how the persistent undersupply of housing has been an ongoing and worsening trend over the last 13 years. Throughout the presentation, he emphasized the impact of higher mortgage rates and lack of inventory on declining affordability. He talked about how sellers remain “locked in” to their low mortgage rates, and are reluctant to list their homes, further exacerbating the shortage. 

One of the most alarming figures Arbit presented was the affordability index, which stands at 93. This indicates that the median income in Minnesota is only 93% of the minimum income required to qualify for a median-priced home at current interest rates. The data also revealed that the typical monthly mortgage payment on a median-priced home has risen to approximately $2,550, up by about $900 per month since 2021. These higher payments are pressuring household budgets and are a key factor in the decline of first-time buyers, which is now at its lowest level since 1981. In addition, the median age of first-time buyers has increased from the early 30s to around 38 years old. 

The actual inventory numbers further highlight the imbalance. Pre-COVID, Minnesota had roughly 16,000 active listings, but that number has fallen to between 11,000 and 12,000 today. Arbit highlighted that the shortage is most acute in the affordable segment, particularly in the $300,000 price range, where both new listings and closed sales have declined sharply. Conversely, million-plus dollar homes have experienced growth, indicating shifting dynamics among different market segments and reflecting the fact that luxury buyers aren’t nearly as rate sensitive as a more typical buyer. 

Arbit stressed that a substantial expansion in housing supply is urgently needed. His analysis showed that, to achieve a balanced market with roughly 4 to 6 months of supply, Minnesota must add roughly 4,600 new units in the $300,000 range alone. Overall, achieving balance would require a 150% increase in inventory—“double plus half” the current supply—with some segments requiring even greater increases. 

As the session concluded, committee members raised questions for Arbit and Eger regarding regional disparities, the quality of new construction, the broader economic impacts of the housing shortage and the notion of “drive until you qualify.” The testimony left little doubt that without a significant increase in housing production, the affordability crisis will continue to hinder economic and job growth and limit opportunities for Minnesotans.  

The presentation was a significant achievement for our Advocacy efforts and further demonstrates MNR’s leadership and influence with legislators at the State Capitol. 

Watch MNR’s full testimony