St. Paul Just Implemented the Nation’s Strictest Rent Control Law. It’s Already Backfiring Tremendously
Posted On November 17, 2021
A Swedish economist once remarked that rent control “appears to be the most efficient technique presently known to destroy a city—except for bombing.” Unfortunately, we may soon see the destructive consequences of laws limiting rent increases running rampant in St. Paul, Minnesota.
The city just approved a rent control measure that will limit landlords’ ability to increase rents on its 65,000+ rental properties. They will not be able to increase prices by more than 3 percent each year under the new law. Controversially, the initiative does not account for inflation and applies to new construction, not just existing properties. This makes the St. Paul rent control measureone of the strictest in the US—if not the world.
Opponents of the measure made all the usual critiques. They pointed out, for example, that a supermajority of economists, 81 percent per one survey, oppose rent control because of its long-run consequences. Yes, some renters save money in the short term by enjoying artificially low rents. But the restricted prices limit future construction and housing supply which ultimately leads to a housing shortage and less affordable housing in the long run.
In St. Paul, these consequences are already starting to materialize.
“Less than 24 hours after St. Paul voters approved one of the country’s most stringent rent control policies, Nicolle Goodman’s phone started to ring,” the Star-Tribunereports. “Developers were calling to tell the city’s director of planning and economic development they were placing projects on hold, putting hundreds of new housing units at risk.”
“We, like everybody else, are re-evaluating what — if any — future business activity we’ll be doing in St. Paul,” major developer Jim Stolpestad told the newspaper.
Critics of the rent control initiative, understandably, feel vindicated. But this is just the beginning. If nothing changes, investment and construction of new housing will continue to collapse thanks to this short-sighted reform.
There is still hope, though. The new law doesn’t go into effect until May 1, 2022. That means St. Paul still has 5 months to correct its grave mistake.
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Brad Polumbo a guest author for NRN, a libertarian-conservative journalist, and a Policy Correspondent at the Foundation for Economic Education. His work has been cited by top lawmakers such as Senator Rand Paul, Senator Ted Cruz, Senator Pat Toomey, Congresswoman Nancy Mace, Congressman Thomas Massie, and former UN Ambassador Nikki Haley, as well as by prominent media personalities such as Sean Hannity, Dave Rubin, Ben Shapiro, and Mark Levin. Brad has also testified before the US Senate, appeared on Fox News and Fox Business, and written for publications such as USA Today, National Review, Newsweek, and the Daily Beast. He hosts the Breaking Boundaries podcast and has a bachelor’s degree in economics from the University of Massachusetts Amherst.