Housing Expert: St. Cloud Could Boost Affordable Home Supply by Allowing Smaller Lots

(KNSI) – A national policy expert says St. Cloud could significantly increase the number of new affordable houses on the market by building smaller.

The presentation by the co-director of the American Enterprise Institute Housing Center, Tobias Peter, titled “Strong Foundations: A Playbook for Housing and Economic Growth,” stated that St. Cloud will need 17,000 new housing units of all kinds over the next 10 years. The playbook is part of a national program developed by the U.S. Chamber of Commerce and the American Enterprise Institute Housing Center to spur more development.

Peter spoke with KNSI News immediately after Wednesday’s summit, stressing his biggest recommendation. “In St. Cloud, what you should be doing is providing builders with the flexibility to set slightly smaller lot sizes. They don’t need to be super tiny lot sizes, but just on average a little bit smaller than what they’ve been building, and that brings three distinct advantages.”

Those advantages include lower land costs, smaller homes that cost less to build, and cheaper finishes. All contribute to savingsthat Peter says could help builders hit price points affordable for the working class. The city’s land development code currently requires a 6,000-square-foot lot for a single-family home. Peter says smaller lots should be a citywide policy, not limited to special planned unit developments or conditional use permits.

He says, new homes in St. Cloud are being built for around $350,000. Peter estimates that with slightly smaller homes, builders could reach the $250,000 to $300,000 range, making new housing affordable to middle-income buyers. As those buyers move into new homes, he says, they would free up older, less expensive housing.

He described the situation as a policy failure. “Housing affordability is really a self-inflicted wound. So, it’s bad policies have been driving up home prices and have led to underbuilding so that we don’t have enough housing. And of course, if you have a scarcity that drives up the price.”

Peter cited environmental and energy codes as examples of problematic policies, noting they can add $30,000 per home, or approximately 10% of the cost. He praised St. Cloud for its faster permitting processes but emphasized that removing regulatory barriers would allow more housing construction at lower price points. “In general, it’s just government needs to get out of the way. And they need to allow builders to build more housing,” Peter said.

Peter, focuses his research on housing risk, mortgage markets, and first-time homebuyers. He has testified before Congress, and his work has appeared in the Wall Street Journal, American Banker, and Business Insider. He holds a master’s in public policy from Harvard Kennedy School and a bachelor’s degree from the College of St. Scholastica.

The Central Minnesota Builders Association and the St. Cloud Area Chamber of Commerce put on the event.

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