Klobuchar and Demuth Are Debating Housing.

Issue 30

By David Thomas Graves

Minnesota’s Problem Is Bigger Than Housing.

Minnesota is one of the most innovative states in the country. We have world class health care, major companies, strong communities and people who know how to make things work.

I left northern Minnesota when I was 20 because the opportunities I wanted were not there. People should leave because they want something different. They should not have to leave because building a life where they grew up became impossible.

Housing is becoming part of that choice.

Minnesota Housing says the state needs 260,000 additional housing units between 2025 and 2035. About 195,000 are needed for expected household growth. Another 65,000 are needed because Minnesota already underbuilt between 2006 and 2024.

That is a massive problem.

And I think the current debate for governor is too small for it.

What the Candidates Are Missing

Amy Klobuchar says Minnesota is currently short roughly 100,000 homes and wants to put the state on a path to build at least that many additional homes, condos and apartments. Her plan includes permitting reform, standardized applications, fewer redundant requirements, rural financing, manufactured housing, state land for housing, tax credits and private investment.

Lisa Demuth comes at affordability from the cost side. She wants lower property taxes and fewer state mandates. She has proposed $150 million in property tax relief and has pointed to energy codes and other government requirements as costs that should be reduced.

The political narratives make these two approaches sound miles apart.

They aren’t.

Klobuchar understands that Minnesota needs more supply and that government can make housing harder to build.

Demuth understands that government itself can add cost.

Both are right.

Neither goes far enough.

Klobuchar’s roughly 100,000-home shortage and Minnesota Housing’s 260,000-unit estimate are different calculations. The first describes the shortage today. The second looks through 2035 and includes future household growth and past underproduction.

Minnesota has to solve both.

Demuth’s argument has a different hole. Deregulation means nothing unless we know what we are eliminating, what it costs and what happens when it disappears.

If a city charges a developer for a sewer extension and we eliminate the charge, the sewer did not become free.

Someone else pays for it.

This is where I would change the debate.

If I were standing on that stage, I would not be talking about housing as an isolated problem.

I would be talking about affordability.

Housing is built with labor and borrowed money on land connected to infrastructure. Somebody has to pay for all of it.

And most families borrow money to buy the finished product.

For more than a decade after the 2008 financial crisis, borrowing costs were historically low. The Federal Reserve pushed rates near zero again during COVID. Then inflation hit, rates went up and the economics changed.

A development that works at one financing cost can die 200 basis points higher.

The land did not change.

The blueprint did not change.

The price of the money changed.

That belongs in an affordability debate.

So do wages.

If you are like me and have spent most of your adult life around labor, unions, negotiating rooms, labor policy and labor politics, you learn quickly that the economy eventually runs through the workforce.

Workers produce. Workers earn. Workers borrow. Workers spend.

The Federal Reserve itself has to watch the labor market because Congress requires it to pursue maximum employment and stable prices. Banks have to care about labor income because people repay mortgages with paychecks.

And the Minnesota Department of Employment and Economic Development (DEED) gives us a pretty brutal picture of what those paychecks are up against. A Central Minnesota household with two full-time workers and two children needs about $98,500 a year to meet basic needs.

Housing costs $1,864 a month.

Child care is $1,298.

Food is $1,266.

Transportation is $1,221.

Savings are not included. Neither are vacations, entertainment or eating out. Nearly $100,000 just to cover basic needs. Now tell me this is only a housing problem.

A cheaper house 50 miles from work can leave a family worse off after another vehicle, gasoline, insurance, maintenance and hours spent driving.

A company can announce 800 new jobs and still have a labor problem if workers cannot afford to live close enough to take them.

A tax cut can put money back in someone’s pocket while housing and transportation take it right back out. Housing affordability is part of living affordability.

What do I earn?

What does it cost me to live close enough to earn it?

What is left when I am done?

That is the debate I want Minnesota to have.

Here Is How I Would Attack It

Start with the house. Follow every major cost from dirt to front door. Land. Labor. Materials. Financing. Insurance. Infrastructure. Government fees. Regulation. Approval time.

Then find the bottleneck.

Minnesota already collects part of the information. Municipalities collecting more than $5,000 annually in covered construction and development fees must report those fees to the state. Minnesota law also requires covered municipal planning and permitting fees to be fair, reasonable and proportionate to the actual cost of the government service being provided.

Use the data.

I would create a Minnesota Housing Production Scoreboard.

Approval time.

Government costs.

Infrastructure costs.

Units permitted.

Units completed.

Compare similar communities.

If one city approves comparable housing faster, find out why. If a fee cannot be justified by the service it pays for, eliminate it. If two independent reviews can happen at the same time, run them at the same time. If a regulation protects people, keep it.

Deregulate with a scalpel, not a machete.

Government should not make people’s lives harder unless it can prove the burden is necessary.

Then deal with the actual constraint.

If it is a road, build the road. If it is sewer capacity, solve the sewer capacity. If public land can unlock a viable development, use it. If a rural project has real demand but cannot close a financing gap, determine whether limited state support can bring private capital into the deal.

And stress-test the economics.

If a publicly supported development works with cheap financing but falls apart when borrowing costs rise 200 basis points, taxpayers should know that before putting money into it.

Minnesota does not need taxpayers financing 260,000 homes. We need builders, banks, credit unions and investors financing most of them.

Government should fix the problems government is uniquely positioned to fix.

When taxpayers contribute something valuable, put the expected result in the contract.

Units. Price. Timeline. Performance.

Use clawbacks when appropriate.

I would also look for the small builder penalty.

A company building 500 units can spread engineers, attorneys, financing expenses and compliance costs across 500 units.

A builder producing ten cannot.

Find the fixed government costs that disproportionately hit smaller projects and determine which ones actually serve a necessary public purpose.

We need large developments. We also need thousands of smaller ones.

Then connect housing policy to economic-development policy.

If Minnesota puts public money behind 800 new jobs, ask where those workers will live before approving the deal.

What will housing cost?

What will transportation cost?

Can the roads handle the growth?

Is child care available?

Minnesota Housing already uses job growth, regional employment centers and long commutes when evaluating workforce housing needs.

Take that logic across state government.

The Standard

Then I would grade myself. Build a Minnesota Worker Prosperity Index around after-tax earned income and the essential costs required to live and work in each region.

Put every affordability policy against it.

Klobuchar could build 100,000 homes and fail that test.

Demuth could cut regulations and fail it.

I could implement everything I just proposed and fail it.

Good.

Because the point is not proving that our preferred political solution worked.

The point is making it possible for people to build a life here.

I left northern Minnesota at 20 because the opportunities I wanted were somewhere else. Minnesota cannot create every opportunity in every community. But we can build a state where housing, infrastructure, transportation and work give people a real choice about whether they stay or leave.

That is what affordability ultimately buys.

Choice.

The choice to take the job without losing the raise to the commute.

The choice to buy the house without becoming house-poor.

The choice to raise a family in the community you grew up in.

The choice to leave Minnesota because you want to see what else is out there, not 

because you cannot afford to stay.

Can a working person build a life here?

That is the standard.

© David Thomas Graves 2026