Last year, Minnesota's homeownership rate saw its largest single drop in 40 years, a recent housing report shows. 

That new rate is 71% after being as high as 75% just a few years ago. That makes the state no longer the regional leader for homeownership—Iowa has surpassed Minnesota for that top spot, according to the Roseville-based Housing Affordability Institute.   

"It's natural for home ownership rates to fluctuate, but the level of fluctuation we've seen in the last couple of years is really what is concerning," said Nick Erickson, executive director of the institute.

Affordability and availability are to blame. Minnesota is short of nearly 100,000 homes–two-thirds in the Twin Cities metro—and has the highest median home price for new and existing single-family homes in the upper Midwest region.

There are fewer permits for new home builds despite that growing need for housing, the report found. Demand for homes that outpaces supply drives up costs and prices people out of the market, Erickson said.

And not enough affordable rental units doesn't help either as people try to save for down payments.

"This is a problem that is now kind of feeding itself and without intervention, it's just going to continue," he told WCCO in an interview Wednesday. 

The National Association of Realtors earlier this month said the typical age for a home buyer has climbed to 40 last year, an all-time high last year.

Changing course, Erickson said, requires government intervention. 

A bipartisan package of bills to address affordable housing at the state capitol this past legislative session didn't clear the finish line, though lawmakers vow to renew their push in February when the Legislature returns once again. 

"We've made more progress this year on this issue than last year," Rep. Mike Howard, DFL-Richfield, one of the lead authors of the "Yes to Homes" package, said earlier this year. 

Among the proposals put forward that didn't ultimately pass is legislation designed to cut down red tape in order to build more starter homes. like townhomes and duplexes, and ensure those plans are approved by cities in a timely manner by streamlining that process.

Other bills focused on lifting parking directives and removing aesthetic requirements — the mandated use of premium products as the minimum construction standard — that supporters say are barriers to development. 

"The bipartisanship that surrounds it here in Minnesota mirrors what we're seeing across the country at the state level, and it really is encouraging to see, but I think it also speaks to the depth of the challenge," Erickson said. "This is a crisis that is affecting Minnesotans across the board as it is Americans."