In Northwest Minnesota, there is an increasing need for housing to enable growth of the region's workforce. According to U. S. Census ACS 5-year estimates, the Northwest region's total housing units increased 2.4% from 2012 to 2022, while the population increased 4%. That population growth is increasingly driven by people moving to the region from other regions, states, and countries.

Figure 1 shows the net population increase from births minus deaths, which is called "natural increase," and people moving in minus people moving out, called "net migration." These are the only two ways the population can grow. The region saw a positive natural increase throughout most of the last decade, having more births than deaths. But from 2016 to 2018, net migration had a greater contribution, and since 2020 it has been the only contributor to population growth since the region has shifted to having more deaths than births. For additional workers to replace retirees and fill a growing number of jobs, those workers need a place to live.

Over the past decade, accommodating the increased population has been somewhat aided by a slight increase in average household size for owner-occupied housing, from 2.44 people per household in 2012 to 2.46 in 2022. Renter-occupied housing remained at 2.02 people per household over this time, according to the U. S. Census ACS 5-year estimates. However, there are much larger trends at play that generate a need for more housing to accommodate workforce growth. For starters, the change in household size distribution creates a substantial need for more housing even as the averages appear benign (Table 1).

Households of three or more decreased, while two-person, and especially one-person households increased. Note that this includes both homeowner units and rentals combined, and provides a more complete picture of the household size trend. This trend implies a need for more housing, even if there were a static population. But the population in the Northwest is growing and aging – meaning there are more retirements – and the number of jobs is also growing. More workers are needed in the region.

What's more, the trend in number of workers per household clearly shows the need (Table 2). We see a decrease in two-worker households, thought that is more than replaced by those with one worker. Granted, there was also 3.8% growth in households with three or more workers, but that is the smallest category and only amounts to 500 households. There is more than ten times that increase in no-worker households. This is the biggest change both numerically and percentagewise. I get it: people want to retire at some point. But retirees still need goods and services in the region, and the workers that provide them need a place to live, too.

The overall increased need for housing is revealed by the housing vacancy rates trend (Figure 2). This is the vacancy rate of all units available for year-round residences, excluding second homes, short-term vacation rentals and such. The rate of homes for sale (also known as the homeowner vacancy rate) is clearly declining, meaning fewer available units for potential workers. While rental vacancies have been more stable, keep in mind that over three quarters of the region's year-round housing is homeowner units. The 23.7% share of rental units are not enough to flatten the downtrend vacancy trend for all housing units.

Given the connection between housing and workforce, it is no wonder I am giving two presentations this summer on the need for housing. Employers and community leaders are paying attention to this issue and want to hear from a labor market analyst because it is a key piece in the region's workforce and economic development strategy.

For more information about Health Care employment in Northwest Minnesota, contact Anthony Schaffhauser at Anthony.schaffhauser@state.mn.us.