Whatever happened to building starter homes?

Byline: Brian Johnson

Back in the 1970s, Oakdale-based Cardinal Homebuilders made a name for itself by building moderately priced houses on the East Side of St. Paul. Tony Wiener, a third-generation leader of the company, says he would love to carry on that starter home tradition.

"That is where our bread and butter was," Wiener said.

Now, like other homebuilders, Cardinal has to find other ways to butter its bread. As the years went by, it became increasingly expensive to build those starter homes. By the early 2000s, Wiener said, Cardinal shifted its focus to more profitable, higher-end products.

Among the builder's current projects is a development in Cottage Grove, where empty-nesters can purchase a new 1,700-square-foot rambler with a two-car garage for prices starting at $550,000.

Whatever happened to affordable starter homes?

Homebuilders say they're virtually nonexistent in the Twin Cities, despite their best efforts to build them.

While other U.S. markets are able to produce nondescript, 1,500-square-foot homes that sell for as little as $250,000 to $300,000, local builders say the Twin Cities is hard-pressed to hit that price point or even something close to it.

Housing First Minnesota says the median price for a new single-family home in Minnesota is $523,300, which is 10th-highest in the nation. The organization, which represents single-family builders, also points to a recent Metrostudy report, which shows that less than 2% of all new homes in the Twin Cities are under $300,000. (The study includes homes built between Jan. 1, 2022, and Feb. 24, 2023).

Home prices are high, in part, because land is expensive. Housing First Minnesota notes that the Twin Cities has one of the most "restrictive urban growth boundaries" in the U.S., which constrains supply and drives up prices.

But that's not the only factor.

Builders point the finger of blame at a variety of culprits, including regulatory requirements. One of the biggest obstacles, builders say, are zoning restrictions calling for minimum lot sizes, which result in larger and more expensive houses.

Some cities, like Richfield, have approved or are considering zoning changes that would allow more affordable homes. But homebuilder advocates say the pace of change is slow and hasn't extended to outer-ring suburbs, where builders could make the biggest impact.

Nick Erickson, senior director of housing policy for Housing First Minnesota, said some builders who work in other U.S. markets...