Housing study provides data for future

A new Cloquet/Scanlon housing study aims to build on the success of a similar study 10 years ago. That study led to support for more rental housing: both Carlton Lofts and the White Pine Apartments were created since then. But the need for housing here and across the region continues to grow, with an estimated 431 housing units needed for a range of incomes.

At the same time, the blue collar manufacturing jobs that were the bread and butter here are stable, but lower-paid service sector jobs are increasing, which means median household incomes are lower.

And the median age is dropping in Cloquet. A graph of age trends from 2010 to 2022 showed Cloquet's median age dropping from a high of 38 in 2012 to age 35 in 2022. Scanlon - which fluctuated more over those same years - hit 42 in 2022, but that followed a low of 34 as the median age in 2019.

"Some of that [younger age growth] has to do with the fact that the community has done a really good job of building affordable housing in recent years, rental housing that's been attracting households, in part because of this regional dynamic. 'Can't find it in Duluth? Hey, I can maybe find it in Cloquet,'" Stantec senior urban planner Jay Demma told Cloquet and Scanlon elected officials in a work session Tuesday, referring to the trend of people living in one place and working somewhere else.

Compared to the rest of Carlton County, Duluth, and even the state of Minnesota, Demma said Cloquet has done a good job of adding more buildings with five or more units in them, especially since 2013. That is filling a need for affordable housing and allowing young people to afford to live here.

But that's not the only need.

Rental demand remains high, with about a 2-percent vacancy rate, which is low, he said. And rents are increasing at a faster rate than the metro area. It can leave people "rent burdened," or spending more than 30 percent of their income on rent. It's an issue across the state and the nation.

"Five percent is a nice equilibrium of vacancy," Demma said. "You have enough turnover so you can make repairs and changes to units when they become available, but you've got plenty of revenue when 95 percent of units are full."

New affordable apartments have also attracted a different household mix, Demma said: younger people living with roommates and nonfamily households, rather than households with children.

Single family housing is a mixed bag, according to the report.

Cloquet's older, smaller and more affordable housing is attracting people who can't afford prices in Duluth or Hermantown. That stock is limited, however, because many senior citizens here are staying put, choosing to remain in houses that might not be perfect for them, but they're paid for.

That is preventing younger households from entering the ownership housing market.

"What that does is lock up a lot of excess housing in the form of empty bedrooms," Demma said.

Median home prices here are near $225,000 now, with the bottom third of homes increasing in price the most, some from around $50,000 in 2012 to nearly $200,000 more recently.

Higher mortgage rates are also squeezing lower- and middle-income households out of home ownership.

A graph showed mortgage payments at various rates, and the household income required to make those payments. A home priced at $232,806 would require a mortgage payment of $1,000 a month at 4-percent interest and is affordable on a household income of $35,335. At 7 percent, that payment rises to nearly $1,400 a month, and requires a household income of $55,759.

There are many ways the city could work to increase available housing, Demma said. Affordable rental condos and townhomes could induce seniors to move out of underutilized single-family homes, opening up more housing for middle-income buyers. Manufactured housing options are another thing to consider for workforce housing. So are more apartments, such as the Solem market-rate apartments under renovation in downtown Cloquet.

Council members unanimously accepted the housing study during Tuesday's formal council meeting.

"I think the EDA and the city council and the community will continue to unpack and digest the study," said Holly Hansen, community development director. "[We] look forward to coming up with a work plan like we did with the last one, that helps guide the work that we do, so we understand ownership, rental, affordability - all those buckets that we want to accomplish working with."