Grand Marais – the destination of the 2024 WPI fellows’ first road trip – can be considered a microcosm of the U.S. economy, according to Christopher Farrell, an economics columnist for the Star Tribune newspaper and a senior economics contributor at “Marketplace,” American Public Media’s nationally public radio business and economic program. Farrell mentioned that just 48 hours before we headed to this beautiful city in the northern part of the state, which is almost in Canada.
Grand Marais is an amazing small town with 1.300 habitants, surrounded by lakes and full of great and lovely people. However, like much of America, it is facing significant economic challenges, which have become one of the most important issues in the U.S. presidential election.
One of the economic problems in Grand Marais is the shortage of houses. After the 2008 financial crisis, builders reduced their investments as it became more difficult to raise funds. At the same time, it became harder for consumers to obtain loans, and the home values increased sharply.
According to Farrell, what was already a problem worsened when the interest rates increased in the United States (last week, the Fed cut rates for the first time in more than four years). People are reluctant to sell their homes if they have a 2.6% mortgage rate, because if they buy a new one, they will have to pay a 6.5% rate.
In Grand Marais, 550 houses will be needed over the next five years to meet the demand, according to Chris O’Brien, board commissioner of Cook County Housing Redevelopment Authority (HRA). That amounts to 20% of the current number of houses in the city.
Chris O’Brien, who is a board commissioner of Cook County Housing Redevelopment Authority (HRA)
The HRA was created in 2021 to help address the housing problem in Grand Marais and Cook County. Currently, the HRA has attracted some builders to the region and the city of Grand Marais has donated some land where 51 apartments are being constructed.
“It will be a great step for Grand Marais,” said O’Brien, who, along with his wife Jane Alexander and their dog Boogie, is part of the best host family in Grand Marais (the fellows stay with host families from the community when they are in northern Minnesota).
The HRA is not dealing with the housing crisis alone. Community members are also trying to help solve the problem. Sarah Hamilton, who owns the restaurant Trail Center Lodge, and her sister Anna have created a nonprofit organization to build affordable houses. They have received donations and also sell the houses at cost price.
Sarah Hamilton has created a nonprofit organization to build affordable houses
Hamilton said having affordable houses is essential for the city to attract workers. As it is expensive to have a place to live in Grand Marais, workers just do not move to the city. Business owners have also struggled with this issue.
