A growing number of state residents are paying up to half their income for a place to live and one of the primary solutions for addressing the problem - building affordable housing - has run aground for lack of financing.
Mary Smith, 34, used to look askance at people who couldn't pull their own weight in society and needed help with their housing. That was when she had a job selling jewelry and was on her own, making her $800-a-month rent payment.
Then, Smith said, her circumstances changed at the hands of an abusive partner.
"I sold jewelry until I got beat up and lost hope," Smith said.
Smith said her life fell apart because of the domestic abuse and the loss of her job. It drove her and her 3-year-old son into a homeless shelter.
Smith said she's regained hope.
Now, she lives in a St. Paul apartment owned and managed by CommonBond, the St. Paul-based nonprofit that is the region's largest supplier of affordable housing.
CommonBond also helps residents restart their education and find work. Many view it as how affordable housing should work.
However, the entire system is under a lot of stress these days.
System under stresss
First, demand is spiraling.
CommonBond CEO and President Paul Fate said there are 5,800 people on their affordable housing waiting list.
"We just opened a 50-unit development in Maplewood, a family development," Fate said. "We had 550 people apply for those 50 units."
The demand for affordable housing is growing just as a big problem has emerged. Financing for building the units has mostly evaporated.
The money drought has derailed projects, including the rebuilding of Har Mar apartments in Roseville. There's water damage and decades of deferred maintenance at the 1960s-era complex.
However, the potential is obvious. The exterior bricks and mortar are rock solid, and the lumber framing is fine.
Minneapolis-based Aeon, another Minnesota affordable housing developer, now owns the complex and is ready to spend millions gutting and rehabilitating the apartments.
But the project is on hold. Banks and other big investors are staying on the sidelines.
In the past, they've been major players in financing affordable housing. They've done that through their purchase of low-income housing tax credits that gives them tax breaks.
But investors have taken some huge losses.
The experts say the investors don't need tax breaks when they're losing money, and plummeting real estate values have put fear in the hearts of all kinds of investors, large and small.
The losers in the equation, Aeon's Gina Ciganik said, are people in need of affordable housing - single parent families, older people on fixed incomes and low income workers.
"When you're making twelve dollars, fourteen dollars an hour, which seems like a pretty good start, it is very hard to find a place to live in the Twin Cities area," Ciganik said.
The picture in greater Minnesota is worse.
Rick Goodemann, the executive director of the Southwest Minnesota Housing Partnership based in Slayton, said employers in his area are ready to expand and hire workers. But, Goodemann said the rental housing vacancy rate in some communities is near zero.
Even if there were vacancies many of the new jobs don't pay enough to allow workers to afford the rent, much less buy a home. Goodemann said the lack of financing for affordable housing has forced him to put several projects on hold.
"We actually have an area of the state that has job growth and we're being hindered because we can't produce the housing," Goodemann said.
Even if investors jump back in there's a huge affordable housing shortage in the state. The estimate from Minnesota officials is the state is short 23,000 units of affordable housing.
The affordable housing investment drought is playing out as the recession causes job losses and eats into household incomes. The result is a growing number of Minnesotans are house or apartment poor.
CommonBond's Paul Fate said 1-in-8 Minnesotans pay up to half their income for housing.
"Any of those families or individuals that are paying those kinds of housing costs is on the edge of losing their homes and becoming homeless," Fate said. "So the economic and social instability that that represents is daunting."
Mary Smith's future looks more stable than it did a year ago, when she was homeless. Smith has a place to live and she said she's regained the hope she had lost.
Smith said she's grateful there was help available when she needed it.
"You can't judge anyone until you've been in those circumstances," Smith said.
Projects are stalled and demand vastly outstrips supply. Still, there are some glimmers of hope on the horizon for affordable housing.
Federal stimulus dollars have helped put some of the stalled projects back on track, and there's talk of reengineering federal rules to help attract investors back to the low income housing tax credit market.