St. Paul’s Strict Rent Control Leads to Sharp Drop in New Construction
Four years after St. Paul enacted rigid rent-control limits, building permits fell about 60 % while nearby Minneapolis saw growth, prompting officials to roll back most of the policy.
St. Paul’s 2022 rent-control ordinance eliminated any inflation adjustment, a move critics said would scare developers away. As predicted, the city’s building permits dropped by about 60 % while neighboring Minneapolis experienced an increase in construction activity as firms moved just a few blocks away. The scarcity of new housing led St. Paul’s lawmakers to rescind the majority of the rent-control rules.
Minneapolis council member Aisha Chughtai, who identifies as a socialist, remains convinced that guaranteeing affordable housing outweighs market concerns, even though the city has not adopted rent control and its mayor has pledged never to do so. Economists such as Salim Furth of the Mercatus Center argue that such policies damage maintenance and can even encourage neglect, citing historic examples from New York City. The episode illustrates the tension between activist housing goals and market-driven supply dynamics.
Why it matters
The case shows how strict rent-control can sharply curb housing supply, affecting affordability and city growth.
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