“There are in nature neither rewards nor punishments — there are consequences."
As rent control makes a stubborn comeback in America’s bluest cities, the research catching up to it is delivering findings its advocates would prefer to ignore. Last week we covered how rent control impacts the overall housing supply (TLDR: supply goes down more than 10%). Today we dig into how rent control impacts housing values in an MSA and redistributes wealth among owners and renters.1
Voters in St. Paul, Minnesota, a city with no history of rent control, passed laws in 2021 that capped rent increases at 3%. Those laws, which were not expected to pass initially, were later amended and made slightly more flexible. Even so, St. Paul represented the first major new rent control implementation in the U.S. since the 1990s and a rich research subject as the policy change was abrupt, severe and unanticipated by the market. City-wide, rent control caused a “decline of 4.0% to 5.5% in the value of [residential] real estate in St. Paul over the nine months after the law was enacted.” That includes owner-occupied and rental properties alike.
The rest of this analysis is for paid subscribers.
Join a community of fund managers, principals, and lenders who use this work in IC memos and credit decisions. Full analysis, the complete archive, and zero sell-side noise. $10 a month. No annual commitment required.
Upgrade to Premium Today - 30 Days FREE!