Housing prices jumped 13 percent in Minnesota and 21 percent in metro last year. Here's what one Realtor says is driving it.

·3 min read

Aug. 25—Home prices in Minnesota have taken one of the biggest jumps ever — a 13 percent one-year jump, according to the Minnesota Realtors group. In the metro area the increase was 21 percent.

After decades of effort by government officials and a growing population that needs it, the cost of housing continues to move in what many see as the wrong direction.

But Chris Galler has an idea as to why. As the association CEO and a 36-year real estate veteran, he works every day with builders, realtors and home-buyers.

Galler watched as the average sales price for a Minnesota home shot up 13 percent in the 12-month period ending in August to $360,000.

The Pioneer Press interviewed Galler earlier this month. This interview has been edited for length and clarity.

Were you surprised by these numbers?

I'd like to say I was, but I wasn't. We have been dealing with double-digit increases for more than a year now.

Why can't we build homes people can afford?

It's an oxymoron among realtors. You say you want affordable housing, then you pass ordinances to make the costs go up.

Well, decide what you want.

Cities, in general, tend to zone for expensive single-family homes, and not the cheaper options. Is zoning the problem?

Zoning is only one factor, and there are all kinds of zoning issues. The cost of labor is up, and the costs of materials are up.

But people are still buying houses.

Oh, yes. Interest rates are very low, and people have a lot of COVID stimulus money. That allows you to purchase more home, so prices go up.

For $155,000, you can buy a new two-bedroom home in San Antonio, Texas. That's less than half our state average. Is Texas doing something right?

It's mostly regulations. Some of them are beneficial, but we should let the consumer decide.

Give me an example.

I have an air exchanger in my basement, required by regulations. There is a cost to that, and to maintain it, too. My old house didn't have one, and it worked just fine. Now there's a new requirement. We have to have a disclosure about gas fireplaces. You have to warn them that the glass gets warm. On a fireplace.

Why? Someone burned their fingers. They say, 'Oh, this only adds $10.' But it's not the big things, it's all the little things.

Are regulations worse in Minnesota?

Housing First, a housing advocacy non-profit, did a study, and the same house that was in Lake Elmo cost $47,000 less in Hudson, Wis. That is not the about the cold weather or labor costs. That is all regulations.

Should we be building more affordable housing everywhere?

The core cities are already filled. They can't build more affordable housing. We have to look to the suburbs and ex-urbs.

Cities have spent hundreds of millions on government-paid affordable housing. Should we keep on spending?

Well, it didn't work in the past. The problem is way bigger than an apartment building here or there.