> This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%.
This seems like too short-term a study. The argument against artificially holding prices down is that people won't produce as much as they would otherwise and people won't be able to get the thing they would otherwise buy. So what we're predicting a rent control policy will do is cause a shortage of rental accommodation in the area.
Now how that expresses itself in an accounting sense, who knows (probably the economists). Good question to study. But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable. Initially rent controls will probably be set near the previously ideal market price, I'd guess there are a lot of 12 month leases and housing construction projects probably don't reset that quickly either.
> But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable.
Hard disagree. Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now. That's like saying the stock market wouldn't respond quickly to changes in next year's tax law.
> Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now.
That's not accounting for the time value of money.
Suppose you have a rental unit and before rent control you were planning to rent it out. That now has far less attractive returns and it suddenly makes more sense to sell it as a condo to an occupant rather than keeping it to rent it out. Likewise, other prospective landlords no longer want to buy it at the previous market price (returns went down and they can invest in stocks or housing in some other city instead), so the short-term effect is to increase the number of property sellers and decrease the number of buyers. Short-term, property values going down is the expected thing.
But construction going down is also the expected thing, for the same reason. If property values are lower then the number of viable construction projects is lower and less construction happens.
The lack of construction then continues until rents, even after rent control, are high enough to justify more construction, i.e. are even higher than they were originally, because now to justify the same investment as before you need the current rent to be high enough to account for the inability to increase it later. And with less construction happening, that's the natural result in a growing area. More people have to bid on the same number of units, rents go up. So the short-term effect is lower real estate prices, the long-term effect is higher.
Now you say, if we expect real estate costs to be higher later, why don't investors take advantage? Which is the "time value of money" issue. If you invest there now because the prices will be high later, what do you do with the property in the meantime? If you don't rent it out, paying $1 today to get $1 in ten or twenty years is dumb, so you only buy if the current price is at a discount. If you do rent it out, then you'd be stuck trying to sell a building with a rent-controlled tenant, which isn't worth as much as the same building as empty as you bought it which you could sell as condos or rent out at current rents instead of price controlled ones, and then you still need a discount. And so the current seller has to provide a discount even if the real estate costs will be higher in a few years.
This argument presupposes multiple levels of assumption. By the point where the assertion is made that construction costs would drop, the prediction's error bars equal the entire range.
There's no reason to believe that construction companies would accept jobs at prices below the cost of materials and labor. Construction companies frequently let workers go rather than accept large negative cash flows.
> There's no reason to believe that construction companies would accept jobs at prices below the cost of materials and labor.
Who's talking about cost of material and labor though?
Not only construction companies make good money, but the price of the land is a significant part of housing cost. And this price is entirely driven by the value of the real estate that will sit on it.
There is no assumption that construction costs would drop. The premise is that construction activity would decline until the lack of construction induces enough scarcity for even rent-controlled properties to cost enough to justify construction costs.
If other investors are irrational that's a wonderful arbitrage opportunity. But good arbitrage opportunities are rare and don't last very long, so maybe they are rational.
That does depend on the underlying market. Often you can make money (especially as a small participant) only if you can predict when the other participants in the market will snap back to reality. This can be pretty difficult when the market is more detached from the underlying activity it's supposed to represent (and property markets are often not very transparent or fast-moving).
In a highly liquid commodity market full of professional traders, I'd agree. But the housing market isn't that liquid over 9 months and there are a lot of small timers. It seems more likely there'd be some sort of initial wobble as sophisticated participants reposition, then a period of calm, then the actual impacts set in over a few years.
It might not happen that way - someone does need to check - but at 9 months I wouldn't read much in to this study. The physical market would still be reorganising and it seems entirely possible that the eventual impacts are just different than what this study suggests. I'd want a period of more like 5 years to be confident that the data had given everyone in the market enough time to feel the impacts of artificially low rents and reposition appropriately.
Except the housing market, especially the rental market, is still significantly driven by small rental property owners and is a significant source of generational wealth transfer.
Starting with the assumption that all or even most investors / actors are rational is a continuing pox on both economic scholarship and societal thinking
Moving prices is not the same as moving the market, and famously the market might cause them to go insolvent faster then the market goes rational. Which would mean that they weren’t actually rational and this is all circular reasoning?
The plot on page 39 certainly looks like the St Paul market turned somewhere around July of 2020, over a year before the rent control, and the downward trend accelerated over the next couple of years. I'm skeptical of the authors' ability to tease out the contribution of rent control to a process that had already begun well before the alleged causal event.
I lived there at the time. The George Floyd riots were in late May/early June 2020. I went to the protests by the police station in the Powderhorn neighborhood, that's the police station that got burned down. I got the hell out before that, though.
Most of the damage was concentrated in Minneapolis, a little south of the river. But what happens in Minneapolis affects St. Paul, and vice versa. St. Paul wasn't unscathed, either. Property values dipped as a result of the riots, and I'd go find more evidence of that if it wasn't just taken as a fact by the people who live there.
There was also an arson on a construction site in downtown St. Paul later that summer that spooked a lot of folks too.
There's also George Floyd Square, an ad-hoc memorial at the intersection where he was murdered. For reasons beyond me, this was a source of controversy for well over a year, and I know a lot of MN righties who took the city's willingness to leave the memorial there as "capitulating to crime" or something.
In short, don't use Twin Cities property values in the early 2020s to make generalizations about economics or policy. It took years for those scars to heal. Things didn't really go back to normal until 2023 at the absolute earliest, and some things haven't ever gone back to the way they were.
It's terribly hard to isolate rent because of the supply/demand shock (in geographically dependent directions) that COVID had on the market. It made people move, a lot of people got a lot of free money and were out of work, among many other changes.
I’m not clever enough to follow these arguments, but I’m struck by the idea of home prices going down in the face of so much demand. And I think it’s a miracle to have discovered such a lever.
I think this argument depends on what exactly is constraining supply: if prices are at a level where there is still a profit to be made building new housing, it will be built anyhow. If developers and landlords truly are capturing an outsize fraction of the value in building and renting new property, then it might redistribute that value without affecting supply. But in that case the supply is being constrained by something else and it might be better overall to focus on relieving that constraint instead (property development and rental is an area with lots of room for creative accounting, and it seems to vary a lot who is making money and how, I would love to see some detailed breakdown on this).
easy work around for that btw: don't control new construction (unless it replaced controlled old construction. no demolishing and rebuilding just to avoid control)
Then again we have high rates of abandoned or unused housing as investment properties that sit idle even with uncapped markets… might as well cap the market if the effect is the same but people pay less rent
Laughable the one thing that all the English speaking capitalistic countries share today is that most of its citizens most of whom don’t have rent control by the way are headed for a lifetime of being a renter all their life.
They are also headed towards paying more than 50% of whatever income they make to rent that’s the United States, Canada, Great Britain, Australia, New Zealand, and Ireland.
I can’t speak for the other countries, but in United States, the so-called luxury apartment is in fashion, and there is nothing luxury about them, except for the amount of money you will be charged to live there.
The shortage of affordable housing has nothing to do with rent control because over most of the country there is no real rent control effective rent control.
America is the land of luxury apartments currently popping up everywhere. What is also ironic is the fact that there are very few states that have anything like Prop 13 in California, which took a ballot initiative passed by the electorate and was not passed by the legislator’s who supposedly represent the people in short, there will be nothing forthcoming for the majority of people across the country. It’s sink or swim for most you are on your own in poverty.
Supply and demand is and always has been a useful first-order approximation. Reality is a lot more complicated.
Dear reader, never believe anyone who says a serious societal problem is "just" anything. Especially on the internet when they use merely a pesudonym to assert their authority.
Especially when the person behind the pseudonym is a one-time washed-out author desperately clinging to their housing stock in Atherton.
No, it's not a law in the same way as physical laws. Most of the failures in economics of the past 50 years can be mostly directly attributed to a fatal overcommitment to the belief that these attributed relations are incontrivertible.
What really exists, closest to the limit we will call "hard science" or "physics", is the microcosmic focus on individuals interacting in a market. Everything else -- supply and demand as a theory definitely included -- is a statistical extrapolation from micro-scale interactions. Hence the label of "dismal science". It's dismal because every hardline assumption is inevitably contravened by real life physics.
> "Trap" here means the deal is so good that they don't ever want to leave.
Yes. I know someone who has a huge rent controlled place in San Francisco and has had it for many decades. Probably worth like 10K/month if you rented it today. I don't know what his rent it, but he says it is so low that he'll never give it up. He no longer lives in San Francisco, lives elsewhere. The SF place gets used occasionally on weekends. So it remains empty, mostly unused, off the rental market because it would be insane to let it go. This is what rent control does. It's great for him and I don't blame him, I'd do the same too. But it's the wrong incentive.
Basically if you're in a "rent controlled" unit, you benefit, but live in a dumpster, because the owner don't have the reason to invest in the place.
But the supply of new units is down & all other renters are paying higher rates, because there is no incentive to build new units. NIMBY-ism has the same effect.
When Boston ended rent control in the late 90s, all of the sudden the landlords invested in their goldmine buildings and generally improved the city. It sucks for those trying to rent or buy (including me, I paid 60% more for a house in 2002 than what it was worth in 1996), but the city has certainly had a renaissance.
IMHO, the problem now is bad zoning. The rich car-centric suburbs are preventing denser housing- to their own financial detriment. A recent fight is that the state has forced them to allow higher density housing around commuter rail stops. Similar fights about rail trails, future abutters are afraid of change but they are valuable everywhere they exist- in that they are a desirable feature and raise your house's value.
Another problem is that they overbuilt $100/sqft bio-lab space. These are sitting empty, and the owners refuse to lower the rent.. I don't understand how the owners remain solvent.
The funding for the types of infrastructure that is made less efficient by sprawl needs to come from property taxes. Those taxes should then be scaled appropriately to reflect the amount of extra spending on sprawly infrastructure.
This is why you need a two prong approach: city-led redevelopment or redevelopment incentives on top of rent stabilization. Boston is not rapidly growing new housing relative to the number of people who are trying to live there. The median rent price per capita of the Boston metro is much, much higher than NY metro, nearly 4x in fact.[1] Boston should not be as expensive as New York, when the latter has rent stabilization (and even some old apartments still under rent control) and the former does not.
> I don't understand how the owners remain solvent.
I think that tells you everything you need to know about who's renting them out.
Also, when the topic of rent control, sorry, rent stabilization, comes up here in the Boston area now people won't allow for inflation adjustments. I'd be okay with a scheme that allowed for automatic inflation adjustment plus some float. But instead they're always proposed in a way that has a max cap. This means that an owner could potentially start losing money. And leads to the flip side of what you describe.
When I point this out in r/boston, cambridgema, and somerville I get downvoted to oblivion because obviously fuck the landlord class. But why on earth would anyone start renting a place if they know they could get soaked over time?
The Massachusetts law requiring cities/towns to build high-density housing around commuter rail stops neglected one thing. There's no open space. To build high-density housing, the city or state would have to buy out the existing landowners, demolish the existing property, and then build anew.
They also neglected the effect of travel time on behavior. Back in the day, I was commuting from a rich suburb to Cambridge, and to get to work on time, I had to get up early to accommodate a 30-minute commute to the train station, wait for the purple line and the red line, and then walk three-quarters of a mile. When I saw how little traffic was on the road, I said, "F it," and drove to work in the same amount of time as it took me to get to the train station.
In the Biolab space, it was a little overbuilt, and now it's tremendously overbuilt because of the killing off of NIH grants and subsequent reduction in investment in the biotech sector. I suspect the reason they don't drop the rent is that it would cause a bit of unraveling. You drop the rent; that changes the valuation of your building, which may mean you're underwater on the loan, the bank calls the loan, et cetera, et cetera. Then, similar properties would suffer devaluation and a similar unwinding. And if you agree with the contagion theory of deflationary environments, it'll all unwind all the way through your 401k and other investments. Sadly, the billionaires would be untouched.
I think your model is off. If single family homes got rezoned to allow large complexes near trains, those plots of land would be worth more and it would likely be worth it for the people living there to eventually sell to developers. This doesn't require the city or state buying anyone out.
In the greater boston area NIMBY's are incredibly effective and will pull out every stop. I.e. instead of designating normal areas as multifamily, they will designate a portion of a golf course as multi family so you'd have to buy out the whole golf course [1].
It really is sad MA is 50/50 in housing produciton per capita [2]. Despite being severely under built and very desirable place to live, and then everyone pretends to be progressive. Michelle Wu in Boston uses "affordable housing" to bring all residential construction to a halt.
One effect of rent-control that I have observed in San Francisco is that well-off people get into baller apartments with the intention of keeping them forever. Over time the rental rate gets inflated away to almost nothing, the person buys a mansion in suburbia, keeping their rent controlled penthouse as a pied-a-terre. In theory landlords would be looking to petition for eviction but that's usually not what happens.
> In theory landlords would be looking to petition for eviction but that's usually not what happens.
For a small time landlord, a good tenant is worth their weight in gold. It's not worth chasing out a reliable tenant you have a good history with just to try to squeeze a few extra bucks out of the property.
I don't think you appreciate the scale of the discount on market rates. If you've lived somewhere for 30+ years, you might be paying $400/month for something that would now be $8000/month.
In NYC, they stopped giving out rent control leases in 1971. What you see advertised now are rent-stabilized (which is what rent-controlled apartments became once vacated). Those are two entirely different things however. But, rent control apartments can be inherited by someone who had been living in the apartment. Naturally, landlords become desperate to stop this happening because, if it does, they're facing possibly another 50+ years of having to rent out a 3 bedroom apartment overlooking Central Park for $600/month (actual example).
Now I don't like rent control as a long-term solution because it's this very American model of pushing what is intended to be a social safety net onto private individuals. I don't care about the landlords. I care about the tenants. With this system you have constant fights where landlords don't do repairs, won't turn the heat on when it's cold (even when legally obligated to do so), will make it unpleasant to live in (eg by doing excessive construction), etc to essentially force tenants out.
Instead we should have the government own and supply below-market rents for people who need it. Nurses, teachers, firefighters, etc. Anyone can get a rent-stabilized apartment now no matter how rich. The only real requirement is you need to be resident in the city, which means 6 months and a day per year. Back when Boston still had rent-control, the mayor had one.
Also, we need to stop letting people hoard property like this.
I used to live in NYC. My apartment was exactly $2k. The previous tenant at the time paid $600/month (they have to tell you this). The owners used a loophole at the time to break it out of rent-stabilization (by doing exactly enough improvements to take the rent to $2000/month at a 40-to-1 ratio IIRC). I think it now rents for $5000/month.
Houses should be for living in, not for parasitic speculation.
I have a friend that got a rent-controlled apartment, circa 2004, exactly one block from Dolores Park (SFbay hotspot). His rent remains under $2000 for a 3/1 apartment (he illegally sublets the other two for much more than this).
>Instead we should have the government own and supply below-market rents for people who need it.
Similar to a few school districts which have built teacher housing complexes; or like a few CostCo locations which have attached apartments, subsidized for employees.
----
My current living situation is as part-time property manager for a few slummier duplexes, on a street of two-dozen identical structures (only three separate humans own the entire street). Just a few years ago there were twice as many owners; happy to see rents cooling off after their overinvestment into an already-functional neighborhood.
> In theory landlords would be looking to petition for eviction but that's usually not what happens.
Are landlords allowed to increase rents when the tenant changes? If so then yes, I would expect them to do so, so if they don't, there needs to be some other explanation.
If they don't, then obviously they'll prefer to keep their long-term, pays-on-time, probably-not-wrecking-the-place existing tenant.
Rents reset to market for new tenants. While it's true some well-off people hang onto apartments while living elsewhere, this is really rare. Turn over is usually quite high. Rent control mostly effects small multi-tenant buildings and especially in-laws, where 1 or 2 hangers-on can really mess with the economics.
My mother lives in a 12 unit building in a very nice SF neighborhood. Only 2 people have been there longer than 10 years, and only 1 other longer than 5.[1] The building was recently sold for only $2 million. The low price is less because of rent control, more because of all the other regulations that make it very costly to renovate or rebuild, lowering the value of the property. That building could/should be replaced with something having twice the number of units, but it never will be. In theory it should be trivial to have a system where existing tenants could be relocated while preserving their rent, but that would only work if there were much more supply coming online creating more structural vacancies so people could be shuffled around efficiently.
I think rent control is an acceptable policy in so far as it directly addresses people's need for a sense of security that simply can't be met by promises of low housing prices in the future. It does come with a cost, a kind of tax, but taxes can be justified. There are much more costly housing policies than rent control. However, those policies unfortunately tend to coexist with rent control (often preexist), so it's really just a mess.
[1] Years ago there used to be 2 tenants who had moved to and lived in Marin, but kept their units because they worked in the city and didn't want to commute every weekday. One was a dentist. But they moved out years ago. The building had no dedicated parking, so that may have factored into their decisions to finally leave. Dealing with that kind of hassle probably worked well (or at least sounded better) when they were younger, less so once they established a life in Marin, even if they continued to commute into the city. And it's not like housing is cheaper elsewhere in the Bay Area, so the extra expense is difficult to justify even for well-off professionals.
You can't just change your tenant. I know someone who bought a place and wanted to move in (which is normally a valid reason to evict) and they still had to get a lawyer and ultimately bribe the person (who actually lived in ny for most of the year) 10k to just leave. 1 story but the tenants have a lot of rights in sf
what is the impact on housing cost as a percentage of income? the whole point of rent control is making it cheaper to live in the city and prevent people from going homeless. working class wealth going down is a negative side effect but its impossible to avoid when most of the countrys net worth is tied up in real estate, and its probably still worth it.
Reading the comments here is an exercise of patience. Why are we so uncreative of solutions to high rent?
Let's just do away with regular renting. Either provide the full service of a serviced apartment, or provide a rent-to-own scheme. In both cases, landlords have incentives to improve the condition of units for better price. In the former case, no equity is built, but you get a much better service, and in the latter case, renters can build equity. And if renters decided to back out halfway, they can sell the paid up equity back to the landlord, some other renter, or to banks who have the capacity to manage the numerous transactions that will happen.
People like to look at rent control from a purely economic lens, but the sociopolitical aspect must also be considered. A suboptimal economic outcome might actually be optimal when all factors are considered. Social harmony and a feeling of hope for underprivileged residents are hard to value, but we must admit that they do have value.
That assumes rent controlled units actually benefit mostly the underprivileged. They don't.
They create a strong incentive to keep a flat indefinitely. It's not unheard of for a person to continue renting a rent frozen apartment after they buy a house because the rent is so cheap - effectively it's a second home.
There's also plenty of corruption. "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years.
Are these "favors" rank-blind (i.e. does its hushhush-nature more-equalize the men, just trying to secure places to live)? Obviously officers and enlisted have different housing, but might an E-6 kiss an E-5's ass only on account of wanting his soon-to-be-vacated housing?
My background is non-military (with one each, officer & enlisted, brother).
Even if they don't benefit economically, there's some value in having them feel that they are valued and have a voice at the table. Such policies can provide the popular support needed to implement other more economically optimal policies, and we're seeing this happen for example with the mayor of New York.
Important context: This paper is from 2023. In 2025, St. Paul massively rolled back rent control restrictions.
Their rent control used to have no exemptions, but now it's become very similar to SF rent control. Strict limit on how much rent can go up for current tenants, but can reset close to market rate when there's a 'just cause' vacancy. And all buildings built after X date are exempt entirely. (X=2004 in St. Paul, X=1979 in SF). Developers argued that any rent control at all limited their ability to finance housing projects.
I think results of studies like this were hugely influential to the changes in rent control that followed.
> but can reset close to market rate when there's a 'just cause' vacancy.
Unfortunate policy, and generating weird incentives to get people to leave!
In Queensland (not exactly perfectly managing the rental crisis but...) their policies include not being able to raise rent more than once every 12 months (leases tend to be 12 months). Importantly it's linked to the property, not the tenants.
There's no actual cap in practice on how much you can raise it by ("reasonable" I believe is the nonfalsifiable term used) but it doesn't generate perverse incentives to kick people out
That was the argument around the original 2021 rent control law! It had zero exemptions to avoid perverse incentivizes like that one. But it didn't last.
Don't use Twin Cities property values in the early 2020s to draw conclusions about anything related to policy or economics. What you're actually measuring is the after shock of race riots.
Without injection of new housing stock by the state, by coops or other agencies than BTR capital investors, it's highly likely to be a weaponised outcome to prove rent controls don't work.
If the construction strike by commercial investors is replaced by public housing then the better outcome can emerge.
"Assessing effects of rent control on wealth is hard, so we threw most of that out and just used housing prices. Also, we're fairly sure that our results are good because there was nothing special happening in St. Paul in 2021 that we could figure. See this scatterplot that looks like inflation, note that the statistics we put just below it also don't look interesting but we've tied them to how rent controls are at the same time socialist and also evil and capitalist. We are objective parties to this because we say we are, please ignore the TLD we're serving this on."
You can almost hear yakitty sax playing in the background. I bet if you met the researchers you could honk their nose.
Why not just redistribute directly? If the concern is that some existing residents will no longer be able to afford things, give long time residents a subsidy voucher.
> Over the nine months following the passage of rent control in St. Paul,
Minnesota in 2021, average property values fell by 4.4% to 5.8%
This to me is the big one. So in addition to rents being more affordable (even if wealthier renters capture most of the gains) limiting the rental market profits also makes houses more affordable to buy? The paper is trying to argue this is bad, but I’m not seeing it.
It’s almost like “rent-seeking behavior” is a negative pejorative of an actor’s actions that negatively influence the market.
I'm not picking up any subjective, simplistic labeling like "good" or "bad." Are we reading the same paper?
Haven't fully read the paper, just the introduction and skimmed through the rest, but it seems they're merely observing that a rent control law went into effect, and given some control variables, it seems like it depressed property values.
Their findings also suggest that while the wealth transfer of rent control factor is real -- that is, landlords are impacted more and existing renters see relative benefit -- that effect is greater among higher-income renters and less among lower income renters.
Second paragraph in the Conclusion:
"While the negative wealth effects for owners are large, our results show the positive effects of the law are poorly targeted. Though the intention is to benefit lower income renters, we find that the largest benefits are received in the neighborhoods of the city in which renters have higher incomes, are less likely to be minorities, and have more education. To the extent that price drops for rental properties reflect future rent savings, and thus housing wealth gains for tenants, our results suggest that the largest cost savings are going to be realized in the neighborhoods with the richest, most educated, and least diverse owners."
How do you quantify "incentive"? Is a landlord really looking at 5% lower property value and deciding it's not worth investing? Is this even true in aggregate?
It is a major paradigm in economics that if you change this by X% it will change something else by Y% and to estimate that ratio. It may be that people don’t really think that way: economic growth seems to be continuous and exponential in character whereas economic dislocations are discontinuous in character.
I think of how I was absolutely shocked when a Big Mac meal was $10 during the pandemic (I think it cost about $2.50 the first time I bought it) and didn’t think I was going to buy 4% less of it but rather I skipped the fries.
Well, there's 2 ways to become a landlord: to buy a house or to build a house. I was focused only on the second way.
The cost of the wood and the labor needed to build the house is unaffected by the rent control, so if cost remains the same, but the reward (or "revenue") from building the house decrease from $100K to $95K, then fewer houses will get built.
So they're losing out on a few dozen new units, but it is made up for by renters across the board having to pay less rent and thus having more money to put into the economy? Seems like a good trade to me?
Because then the units fall into disrepair (because they no longer make sense to maintain) leading to less supply leading to lower availability of units leading to higher cost of housing.
See what happened in NYC regarding the consolidation of housing units.
> Similarly, we need to consider any one-time confounding events in control cities. Most
notably, Minneapolis would be a natural control for St. Paul. However, in addition to the ballot measure on rent control, Minneapolis’s ballot also included referenda on mayoral power and policing. These confounding events mean that if property values in St. Paul changed relative to Minneapolis, we could not attribute the change to rent control.
their mistake is that they excluded Minneapolis for a bullshit reason here. you might as well do the analysis and then tell us. of course, they did, and found all the same effects as st. paul despite no rent control, so they chose not to talk about it.
This makes me wonder if these cities are a good study subject in the first place.
Is this a metro area with serious rental price pressure where rent stabilization is greatly altering the market conditions, or is housing so available to begin with that it’s more of a feel-good legislation that doesn’t shift prices around?
It looks like from a quick search that over half of people in this metro area own their own home.
I imagine that rent control in many Midwestern metros is effectively pointless. The rent is already being controlled by flat or declining populations, cheap land, and high homeownership rates.
I disagree with your last sentence conceptually. It took me about 20 seconds to find a good condition 3 bedroom home in Cleveland, OH in a well-kept neighborhood for $150k.
> Over the nine months following the passage of rent control in St. Paul,
Minnesota in 2021, average property values fell by 4.4% to 5.8%.
Why is this bad? Pretty much every Western society has fallen into the trap of raising property prices as a politcal imperative. People who own 1 (maybe 2) homes believe it's good for them but it only benefits very wealthy people who hoard land.
The real problem is that ever-increasing property prices destroys the fabric of society. It's a wealth transfer from the next generation to older and wealthier people that creates a drain on their entire lives. It's justified by people arguing the current young people will be able to do that to the generation after them. But this can't go on forever.
Want to know why eating out is so expensive? Why third spaces have disappeared? Why basically everything has gotten expensive? it's housing prices. Commercial rent is an input into everything that you buy. Higher costs mean higher wages that need to be paid, which is also an input into everything you need to buy. And the only one who is winning out of all of this is the landlord. If the commercial rent is too low well then it'll get torn down or converted into residential real estate because that's more profitable.
You know who realized this? Xi Jinping [1]:
> Houses are for living, not for speculation
So the Chinese property speculation bubble was quietly popped a decade ago and Chinese real estate has been in a severe and prolonged recession ever since as the market corrects. What's funny is media coverage points this out like it's a problem. It's not. It's intentional.
And if you think that's a purely socialist/communist idea, tell that to Adam Smith [2]:
> As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce.
He had this in common with Mao [3].
So if Marxists, Leninists, Maoists and capitalists all agree that landlords are parasitic, what are we doing?
There's a British former wealth manager and economist named Henry Fudge who has done the math on how the housing market is a "rentier black hole" (as he describes it) on the UK economy and has hollowed out manufacturing as an inevitable consequence when returns on housing exceed all asset classes. It becomes a self-fulfilling prophecies and housing enjoys significant tax advantages and government protections. He calls it The Housing Theory of Everything [4].
Rent control is a bandaid. The solution here is for the government to become a significant provider of housing, as is the case in Vienna [5] and to stop treating housing as a speculative asset. Attacks on rent control are generally a thinly-veiled effort to increase landlord profits however.
We're rapidly re-inventing feudalism here with 1 (and soon more to come I'm sure) trillionaire who will increasingly hoard all the land and assets, leaving the rest of us as impoverished tenant workers who own nothing. Most call this neofeudalism for this reason.
Can you please stop posting low-substance comments like this on HN? This comment was jarring to read, as it's effectively an editorialized summary of the article, posted with little apparent thought, and doing nothing to cultivate curious conversation. This is exactly the kind of commenting we're hoping to avoid here. Looking over your comment history, most of your comments are like this. It's a hallmark of a low-thought pattern of commenting that many of the comments don't even wrap to a second line or end with a period.
Surely they are more likely to sell if they can never be leased profitably? This would put that capital to better use.
Your assumption there is also that the class of ‘renters’ is homogenous and wants to rent. In some cities there is a significant class of people who are forced into continuing with renting because of supply constraints on homes for sale, which are exacerbated by landlords with superior access to leverage buying up stock and pushing up prices. In this situation the landlords actually create their own market.
A comparative shortage of rental properties and of landlords could be very desirable, as it implies more owner-occupiers.
It also implies more capital flowing out of real-estate and into productive industry, which one would assume is also desirable for a thriving economy.
You don't need to ask this question when you can readily observe a century of economic data on rent control. People do all kinds of acrobatics to avoid giving up their rent controlled apartments.
Why wouldn't they? They are locked in at a price that was frozen in time and can't increase. And there is a thriving black market for re-leased rent-controlled apartments. (black markets always occur when supply is artificially restricted).
You're posing a hypothetical that only happens in an alternate universe where the foundational ideas of economics and human behavior don't apply.
> A comparative shortage of rental properties and of landlords *could be very desirable*, as it implies more owner-occupiers.
Ok so 2/3rds of the way through your case you've already moved the goalposts. Here's a reality check for you: a dwelling is a dwelling, whether it is rented or owned. Rent control always and everywhere produces a shortage of dwellings. This hurts everyone.
Lower rent cannot be legislated any more than waterfront mansions for everyone can be legislated. It would be wonderful, if true. But it is not.
What happens is that economics shift from a renewable model to an extractive model.
Farms are renewable so farmers maintain them over centuries. Mines are extractive so they get pumped and dumped.
What landlords do in these situations is try to extract as much money as possible before the enterprise collapses, either literally or figuratively. New housing doesn't come online quickly so both quality and quantity fall.
Well, this is a reason that we have standards and laws about rentable properties.
Landlords who can’t operate within the imposed constraints, those for instance who have debts they used to get into the game in the first place, might simply be forced to leave the business.
Thou shall have luxury apartments which are sprouting up everywhere in America. Where the elevators don’t work, but you do have amenities and you have top and bottom left right stereo, you can hear your neighbors above below and to the left and the right. As a bonus you also get to have extra company to help pay the rent.
Rent control has nothing to do with this bonus accommodation. This is directly out of the sharecropper, subscription own nothing playbook.
That depends on the market. I’m not familiar with St Paul Minnesota, but here in Perth, Western Australia this is raised as an argument every time someone proposes anything to do with rolling back investor tax breaks. That and “there will be no rentals!”
The truth of the situation here is that there is more than enough demand for new housing anyway, directly financed by wannabe homeowners, that ‘investment’ goes 90% into existing stock, not new builds, and that investment properties actually create rental demand as investors crowd out would-be owner-occupiers from both existing houses and new-build opportunities.
In Melbourne, where measures to reduce the attractiveness of investment have already happened, the price of housing has levelled off comparative to other capitals in Aus, and rental availability has actually gone up.
The underlying problem is of course supply, but there appears to be a limit to how fast the building industry can actually build more stock, so with huge demand and limited supply, we don’t need to encourage as much speculation or landlordism in the market to get more built. All it does is add heat and pump prices.
All of the capitalistic English speaking countries today are suffering, the same problem and it ain’t because of rent control, starter houses/homes are not being built for the most part and no affordable apartments are either it’s come down to you shall rent for the rest of your life, and live in a luxury apartment doubled up with roomies, or enjoy living in a car or van on the road.
That modern day tenement apartment is now known as a luxury apartment with the amenities courtesy of an equity company.
There's even a new word for it: "rent-seeking", if you're my age you remember the Ropers as a kindly awkward couple. And Mr. Furley as kind of a weirdo but landlords were never associated with corporate greed for me generation. I realize that situation has changed and I feel for these poor kids.
Heck I remember renting a full house in decent (not great) neighborhoods for $300 which was earnable in a single day.
> This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%.
This seems like too short-term a study. The argument against artificially holding prices down is that people won't produce as much as they would otherwise and people won't be able to get the thing they would otherwise buy. So what we're predicting a rent control policy will do is cause a shortage of rental accommodation in the area.
Now how that expresses itself in an accounting sense, who knows (probably the economists). Good question to study. But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable. Initially rent controls will probably be set near the previously ideal market price, I'd guess there are a lot of 12 month leases and housing construction projects probably don't reset that quickly either.
> But I doubt the impacts of rent control would appear in the market this quickly, it'd take years for the market signals to be measurable.
Hard disagree. Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now. That's like saying the stock market wouldn't respond quickly to changes in next year's tax law.
You probably won't see new commencement of building projects, but it probably doesn't mean ongoing projects would be scrapped...
And these things have a lead time of years
> Rational investors have no problem whatsoever projecting the impact to future cash flows and adjusting the amount they're willing to pay now.
That's not accounting for the time value of money.
Suppose you have a rental unit and before rent control you were planning to rent it out. That now has far less attractive returns and it suddenly makes more sense to sell it as a condo to an occupant rather than keeping it to rent it out. Likewise, other prospective landlords no longer want to buy it at the previous market price (returns went down and they can invest in stocks or housing in some other city instead), so the short-term effect is to increase the number of property sellers and decrease the number of buyers. Short-term, property values going down is the expected thing.
But construction going down is also the expected thing, for the same reason. If property values are lower then the number of viable construction projects is lower and less construction happens.
The lack of construction then continues until rents, even after rent control, are high enough to justify more construction, i.e. are even higher than they were originally, because now to justify the same investment as before you need the current rent to be high enough to account for the inability to increase it later. And with less construction happening, that's the natural result in a growing area. More people have to bid on the same number of units, rents go up. So the short-term effect is lower real estate prices, the long-term effect is higher.
Now you say, if we expect real estate costs to be higher later, why don't investors take advantage? Which is the "time value of money" issue. If you invest there now because the prices will be high later, what do you do with the property in the meantime? If you don't rent it out, paying $1 today to get $1 in ten or twenty years is dumb, so you only buy if the current price is at a discount. If you do rent it out, then you'd be stuck trying to sell a building with a rent-controlled tenant, which isn't worth as much as the same building as empty as you bought it which you could sell as condos or rent out at current rents instead of price controlled ones, and then you still need a discount. And so the current seller has to provide a discount even if the real estate costs will be higher in a few years.
This argument presupposes multiple levels of assumption. By the point where the assertion is made that construction costs would drop, the prediction's error bars equal the entire range.
There's no reason to believe that construction companies would accept jobs at prices below the cost of materials and labor. Construction companies frequently let workers go rather than accept large negative cash flows.
> There's no reason to believe that construction companies would accept jobs at prices below the cost of materials and labor.
Who's talking about cost of material and labor though?
Not only construction companies make good money, but the price of the land is a significant part of housing cost. And this price is entirely driven by the value of the real estate that will sit on it.
There is no assumption that construction costs would drop. The premise is that construction activity would decline until the lack of construction induces enough scarcity for even rent-controlled properties to cost enough to justify construction costs.
The stock market has liquidity, fungibility, low transaction costs, etc etc. https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terri...
I think you're wildly overestimating the rationality of investors.
If other investors are irrational that's a wonderful arbitrage opportunity. But good arbitrage opportunities are rare and don't last very long, so maybe they are rational.
That does depend on the underlying market. Often you can make money (especially as a small participant) only if you can predict when the other participants in the market will snap back to reality. This can be pretty difficult when the market is more detached from the underlying activity it's supposed to represent (and property markets are often not very transparent or fast-moving).
If you're smarter than other investors, you can make a lot of money doing the opposite of what they do.
In a beauty contest, being right alone against everyone else just makes you lose.
Markets can remain irrational much longer than you can remain solvent.
The failures and dislocations and "unanticipated" side effects of rent control are always a consequence of the Law of Supply and Demand.
You cannot repeal that law, though they try again and again and again.
In a highly liquid commodity market full of professional traders, I'd agree. But the housing market isn't that liquid over 9 months and there are a lot of small timers. It seems more likely there'd be some sort of initial wobble as sophisticated participants reposition, then a period of calm, then the actual impacts set in over a few years.
It might not happen that way - someone does need to check - but at 9 months I wouldn't read much in to this study. The physical market would still be reorganising and it seems entirely possible that the eventual impacts are just different than what this study suggests. I'd want a period of more like 5 years to be confident that the data had given everyone in the market enough time to feel the impacts of artificially low rents and reposition appropriately.
Except the housing market, especially the rental market, is still significantly driven by small rental property owners and is a significant source of generational wealth transfer.
Starting with the assumption that all or even most investors / actors are rational is a continuing pox on both economic scholarship and societal thinking
It doesn’t require all or most investors to act rational. A small percentage of rational actors still moves prices.
Moving prices is not the same as moving the market, and famously the market might cause them to go insolvent faster then the market goes rational. Which would mean that they weren’t actually rational and this is all circular reasoning?
actors are in aggregate rational and self interested, but emotions are important.
[dead]
The plot on page 39 certainly looks like the St Paul market turned somewhere around July of 2020, over a year before the rent control, and the downward trend accelerated over the next couple of years. I'm skeptical of the authors' ability to tease out the contribution of rent control to a process that had already begun well before the alleged causal event.
I lived there at the time. The George Floyd riots were in late May/early June 2020. I went to the protests by the police station in the Powderhorn neighborhood, that's the police station that got burned down. I got the hell out before that, though.
Most of the damage was concentrated in Minneapolis, a little south of the river. But what happens in Minneapolis affects St. Paul, and vice versa. St. Paul wasn't unscathed, either. Property values dipped as a result of the riots, and I'd go find more evidence of that if it wasn't just taken as a fact by the people who live there.
There was also an arson on a construction site in downtown St. Paul later that summer that spooked a lot of folks too.
There's also George Floyd Square, an ad-hoc memorial at the intersection where he was murdered. For reasons beyond me, this was a source of controversy for well over a year, and I know a lot of MN righties who took the city's willingness to leave the memorial there as "capitulating to crime" or something.
In short, don't use Twin Cities property values in the early 2020s to make generalizations about economics or policy. It took years for those scars to heal. Things didn't really go back to normal until 2023 at the absolute earliest, and some things haven't ever gone back to the way they were.
“For reasons beyond me”
It’s not like he was a hero or anything.
Neither was Anne Frank but we remember her. We remember victims of atrocities.
It's terribly hard to isolate rent because of the supply/demand shock (in geographically dependent directions) that COVID had on the market. It made people move, a lot of people got a lot of free money and were out of work, among many other changes.
> “…average property values fell by 4.4% to 5.8%”
I’m not clever enough to follow these arguments, but I’m struck by the idea of home prices going down in the face of so much demand. And I think it’s a miracle to have discovered such a lever.
I think this argument depends on what exactly is constraining supply: if prices are at a level where there is still a profit to be made building new housing, it will be built anyhow. If developers and landlords truly are capturing an outsize fraction of the value in building and renting new property, then it might redistribute that value without affecting supply. But in that case the supply is being constrained by something else and it might be better overall to focus on relieving that constraint instead (property development and rental is an area with lots of room for creative accounting, and it seems to vary a lot who is making money and how, I would love to see some detailed breakdown on this).
easy work around for that btw: don't control new construction (unless it replaced controlled old construction. no demolishing and rebuilding just to avoid control)
The key to understanding the effects of rent control is understanding the Law of Supply and Demand.
Artificially holding down rents will result in housing shortages. The lower the rent controlled price, the worse the shortage.
If the rent goes too low, the building owner will stop doing maintenance. Eventually, the building gets abandoned.
Then again we have high rates of abandoned or unused housing as investment properties that sit idle even with uncapped markets… might as well cap the market if the effect is the same but people pay less rent
On the flip side section 8 acts as a price floor.
No easy solutions here. I do think if rent exceeds half your earnings as a minimum wage worker that’s a failure of the social contract.
Want people to have kids, make it possible to raise them on a working class wage.
Rationally , since it’s impossible to raise a family on what most people make , people aren’t making people anymore. Not at replacement rates anyway.
Laughable the one thing that all the English speaking capitalistic countries share today is that most of its citizens most of whom don’t have rent control by the way are headed for a lifetime of being a renter all their life.
They are also headed towards paying more than 50% of whatever income they make to rent that’s the United States, Canada, Great Britain, Australia, New Zealand, and Ireland.
I can’t speak for the other countries, but in United States, the so-called luxury apartment is in fashion, and there is nothing luxury about them, except for the amount of money you will be charged to live there.
The shortage of affordable housing has nothing to do with rent control because over most of the country there is no real rent control effective rent control.
America is the land of luxury apartments currently popping up everywhere. What is also ironic is the fact that there are very few states that have anything like Prop 13 in California, which took a ballot initiative passed by the electorate and was not passed by the legislator’s who supposedly represent the people in short, there will be nothing forthcoming for the majority of people across the country. It’s sink or swim for most you are on your own in poverty.
> The shortage of affordable housing has nothing to do with rent control
Oh, it absolutely does. The abandonment of rent properties in NYC is ample evidence.
Supply and demand is and always has been a useful first-order approximation. Reality is a lot more complicated.
Dear reader, never believe anyone who says a serious societal problem is "just" anything. Especially on the internet when they use merely a pesudonym to assert their authority.
Especially when the person behind the pseudonym is a one-time washed-out author desperately clinging to their housing stock in Atherton.
> Reality is a lot more complicated.
It's still the Law of Supply and Demand. Just like F=ma always applies, even if the results are complicated.
No, it's not a law in the same way as physical laws. Most of the failures in economics of the past 50 years can be mostly directly attributed to a fatal overcommitment to the belief that these attributed relations are incontrivertible.
What really exists, closest to the limit we will call "hard science" or "physics", is the microcosmic focus on individuals interacting in a market. Everything else -- supply and demand as a theory definitely included -- is a statistical extrapolation from micro-scale interactions. Hence the label of "dismal science". It's dismal because every hardline assumption is inevitably contravened by real life physics.
The supply and demand curves are different for every person and every business. That makes it complicated - but not wrong.
That's what makes it a model, not a law.
No, no, see, of course it's a law! Now, I'll explain it to you:
First, assume a spherical economy in a frictionless vacuum...
(/s)
Yep. Rent control benefits the people who are already there, but punishes everyone else.
It will increase the price for new comers, lower the quality of buildings due lack of maintenance funding, and decrease new construction.
Rental control is NIMBY for renters who are already there.
> Rent control benefits the people who are already there
Not always. It can trap the person in the apartment, such as constraining where they can work.
It can't trap the person in the apartment because they can leave at anytime.
"Trap" here means the deal is so good that they don't ever want to leave.
Trap is when it is too expensive to leave, so they put up with a lower quality of life, such as not being near their jobs.
If it's too expensive to leave, it's too expensive for someone else to move in too.
> "Trap" here means the deal is so good that they don't ever want to leave.
Yes. I know someone who has a huge rent controlled place in San Francisco and has had it for many decades. Probably worth like 10K/month if you rented it today. I don't know what his rent it, but he says it is so low that he'll never give it up. He no longer lives in San Francisco, lives elsewhere. The SF place gets used occasionally on weekends. So it remains empty, mostly unused, off the rental market because it would be insane to let it go. This is what rent control does. It's great for him and I don't blame him, I'd do the same too. But it's the wrong incentive.
There is a good paper about the effects:
https://www.sciencedirect.com/science/article/pii/S105113772...
Basically if you're in a "rent controlled" unit, you benefit, but live in a dumpster, because the owner don't have the reason to invest in the place.
But the supply of new units is down & all other renters are paying higher rates, because there is no incentive to build new units. NIMBY-ism has the same effect.
When Boston ended rent control in the late 90s, all of the sudden the landlords invested in their goldmine buildings and generally improved the city. It sucks for those trying to rent or buy (including me, I paid 60% more for a house in 2002 than what it was worth in 1996), but the city has certainly had a renaissance.
IMHO, the problem now is bad zoning. The rich car-centric suburbs are preventing denser housing- to their own financial detriment. A recent fight is that the state has forced them to allow higher density housing around commuter rail stops. Similar fights about rail trails, future abutters are afraid of change but they are valuable everywhere they exist- in that they are a desirable feature and raise your house's value.
Another problem is that they overbuilt $100/sqft bio-lab space. These are sitting empty, and the owners refuse to lower the rent.. I don't understand how the owners remain solvent.
The funding for the types of infrastructure that is made less efficient by sprawl needs to come from property taxes. Those taxes should then be scaled appropriately to reflect the amount of extra spending on sprawly infrastructure.
This is why you need a two prong approach: city-led redevelopment or redevelopment incentives on top of rent stabilization. Boston is not rapidly growing new housing relative to the number of people who are trying to live there. The median rent price per capita of the Boston metro is much, much higher than NY metro, nearly 4x in fact.[1] Boston should not be as expensive as New York, when the latter has rent stabilization (and even some old apartments still under rent control) and the former does not.
> I don't understand how the owners remain solvent.
I think that tells you everything you need to know about who's renting them out.
[1]: https://constructioncoverage.com/research/cities-with-the-mo...
Also, when the topic of rent control, sorry, rent stabilization, comes up here in the Boston area now people won't allow for inflation adjustments. I'd be okay with a scheme that allowed for automatic inflation adjustment plus some float. But instead they're always proposed in a way that has a max cap. This means that an owner could potentially start losing money. And leads to the flip side of what you describe.
When I point this out in r/boston, cambridgema, and somerville I get downvoted to oblivion because obviously fuck the landlord class. But why on earth would anyone start renting a place if they know they could get soaked over time?
The Massachusetts law requiring cities/towns to build high-density housing around commuter rail stops neglected one thing. There's no open space. To build high-density housing, the city or state would have to buy out the existing landowners, demolish the existing property, and then build anew.
They also neglected the effect of travel time on behavior. Back in the day, I was commuting from a rich suburb to Cambridge, and to get to work on time, I had to get up early to accommodate a 30-minute commute to the train station, wait for the purple line and the red line, and then walk three-quarters of a mile. When I saw how little traffic was on the road, I said, "F it," and drove to work in the same amount of time as it took me to get to the train station.
In the Biolab space, it was a little overbuilt, and now it's tremendously overbuilt because of the killing off of NIH grants and subsequent reduction in investment in the biotech sector. I suspect the reason they don't drop the rent is that it would cause a bit of unraveling. You drop the rent; that changes the valuation of your building, which may mean you're underwater on the loan, the bank calls the loan, et cetera, et cetera. Then, similar properties would suffer devaluation and a similar unwinding. And if you agree with the contagion theory of deflationary environments, it'll all unwind all the way through your 401k and other investments. Sadly, the billionaires would be untouched.
I think your model is off. If single family homes got rezoned to allow large complexes near trains, those plots of land would be worth more and it would likely be worth it for the people living there to eventually sell to developers. This doesn't require the city or state buying anyone out.
In the greater boston area NIMBY's are incredibly effective and will pull out every stop. I.e. instead of designating normal areas as multifamily, they will designate a portion of a golf course as multi family so you'd have to buy out the whole golf course [1].
It really is sad MA is 50/50 in housing produciton per capita [2]. Despite being severely under built and very desirable place to live, and then everyone pretends to be progressive. Michelle Wu in Boston uses "affordable housing" to bring all residential construction to a halt.
[1]. https://www.cbsnews.com/boston/news/marblehead-david-modica-...
[2]. https://x.com/JohnEDeaton1/status/1988753789076062606
> To build high-density housing, the city or state would have to buy out the existing landowners
Couldn't they just change the zoning to allow for greater density?
The properties become more valuable, some would want to develop, and some would sell to those developers. Moreso over time.
> Sadly, the billionaires would be untouched.
Why would you conclude that? Billionaires have their money invested in the same things as your 401k, etc.
Indeed, stock market crashes are the greatest tool for reducing wealth inequality. We should want more of them, surely!
Sure, when you kick out all the poor people, the city definitely does look richer.
[dead]
One effect of rent-control that I have observed in San Francisco is that well-off people get into baller apartments with the intention of keeping them forever. Over time the rental rate gets inflated away to almost nothing, the person buys a mansion in suburbia, keeping their rent controlled penthouse as a pied-a-terre. In theory landlords would be looking to petition for eviction but that's usually not what happens.
> In theory landlords would be looking to petition for eviction but that's usually not what happens.
For a small time landlord, a good tenant is worth their weight in gold. It's not worth chasing out a reliable tenant you have a good history with just to try to squeeze a few extra bucks out of the property.
I don't think you appreciate the scale of the discount on market rates. If you've lived somewhere for 30+ years, you might be paying $400/month for something that would now be $8000/month.
In NYC, they stopped giving out rent control leases in 1971. What you see advertised now are rent-stabilized (which is what rent-controlled apartments became once vacated). Those are two entirely different things however. But, rent control apartments can be inherited by someone who had been living in the apartment. Naturally, landlords become desperate to stop this happening because, if it does, they're facing possibly another 50+ years of having to rent out a 3 bedroom apartment overlooking Central Park for $600/month (actual example).
Now I don't like rent control as a long-term solution because it's this very American model of pushing what is intended to be a social safety net onto private individuals. I don't care about the landlords. I care about the tenants. With this system you have constant fights where landlords don't do repairs, won't turn the heat on when it's cold (even when legally obligated to do so), will make it unpleasant to live in (eg by doing excessive construction), etc to essentially force tenants out.
Instead we should have the government own and supply below-market rents for people who need it. Nurses, teachers, firefighters, etc. Anyone can get a rent-stabilized apartment now no matter how rich. The only real requirement is you need to be resident in the city, which means 6 months and a day per year. Back when Boston still had rent-control, the mayor had one.
Also, we need to stop letting people hoard property like this.
I used to live in NYC. My apartment was exactly $2k. The previous tenant at the time paid $600/month (they have to tell you this). The owners used a loophole at the time to break it out of rent-stabilization (by doing exactly enough improvements to take the rent to $2000/month at a 40-to-1 ratio IIRC). I think it now rents for $5000/month.
Houses should be for living in, not for parasitic speculation.
I have a friend that got a rent-controlled apartment, circa 2004, exactly one block from Dolores Park (SFbay hotspot). His rent remains under $2000 for a 3/1 apartment (he illegally sublets the other two for much more than this).
>Instead we should have the government own and supply below-market rents for people who need it.
Similar to a few school districts which have built teacher housing complexes; or like a few CostCo locations which have attached apartments, subsidized for employees.
----
My current living situation is as part-time property manager for a few slummier duplexes, on a street of two-dozen identical structures (only three separate humans own the entire street). Just a few years ago there were twice as many owners; happy to see rents cooling off after their overinvestment into an already-functional neighborhood.
> In theory landlords would be looking to petition for eviction but that's usually not what happens.
Are landlords allowed to increase rents when the tenant changes? If so then yes, I would expect them to do so, so if they don't, there needs to be some other explanation.
If they don't, then obviously they'll prefer to keep their long-term, pays-on-time, probably-not-wrecking-the-place existing tenant.
Rents reset to market for new tenants. While it's true some well-off people hang onto apartments while living elsewhere, this is really rare. Turn over is usually quite high. Rent control mostly effects small multi-tenant buildings and especially in-laws, where 1 or 2 hangers-on can really mess with the economics.
My mother lives in a 12 unit building in a very nice SF neighborhood. Only 2 people have been there longer than 10 years, and only 1 other longer than 5.[1] The building was recently sold for only $2 million. The low price is less because of rent control, more because of all the other regulations that make it very costly to renovate or rebuild, lowering the value of the property. That building could/should be replaced with something having twice the number of units, but it never will be. In theory it should be trivial to have a system where existing tenants could be relocated while preserving their rent, but that would only work if there were much more supply coming online creating more structural vacancies so people could be shuffled around efficiently.
I think rent control is an acceptable policy in so far as it directly addresses people's need for a sense of security that simply can't be met by promises of low housing prices in the future. It does come with a cost, a kind of tax, but taxes can be justified. There are much more costly housing policies than rent control. However, those policies unfortunately tend to coexist with rent control (often preexist), so it's really just a mess.
[1] Years ago there used to be 2 tenants who had moved to and lived in Marin, but kept their units because they worked in the city and didn't want to commute every weekday. One was a dentist. But they moved out years ago. The building had no dedicated parking, so that may have factored into their decisions to finally leave. Dealing with that kind of hassle probably worked well (or at least sounded better) when they were younger, less so once they established a life in Marin, even if they continued to commute into the city. And it's not like housing is cheaper elsewhere in the Bay Area, so the extra expense is difficult to justify even for well-off professionals.
You can't just change your tenant. I know someone who bought a place and wanted to move in (which is normally a valid reason to evict) and they still had to get a lawyer and ultimately bribe the person (who actually lived in ny for most of the year) 10k to just leave. 1 story but the tenants have a lot of rights in sf
what is the impact on housing cost as a percentage of income? the whole point of rent control is making it cheaper to live in the city and prevent people from going homeless. working class wealth going down is a negative side effect but its impossible to avoid when most of the countrys net worth is tied up in real estate, and its probably still worth it.
Reading the comments here is an exercise of patience. Why are we so uncreative of solutions to high rent?
Let's just do away with regular renting. Either provide the full service of a serviced apartment, or provide a rent-to-own scheme. In both cases, landlords have incentives to improve the condition of units for better price. In the former case, no equity is built, but you get a much better service, and in the latter case, renters can build equity. And if renters decided to back out halfway, they can sell the paid up equity back to the landlord, some other renter, or to banks who have the capacity to manage the numerous transactions that will happen.
People like to look at rent control from a purely economic lens, but the sociopolitical aspect must also be considered. A suboptimal economic outcome might actually be optimal when all factors are considered. Social harmony and a feeling of hope for underprivileged residents are hard to value, but we must admit that they do have value.
That assumes rent controlled units actually benefit mostly the underprivileged. They don't.
They create a strong incentive to keep a flat indefinitely. It's not unheard of for a person to continue renting a rent frozen apartment after they buy a house because the rent is so cheap - effectively it's a second home.
There's also plenty of corruption. "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years.
> "Knowing a guy" is one of the best ways to get a rent controlled unit since the wait time can be years.
That's how military housing works. There's an underground "economy" of favors.
Are these "favors" rank-blind (i.e. does its hushhush-nature more-equalize the men, just trying to secure places to live)? Obviously officers and enlisted have different housing, but might an E-6 kiss an E-5's ass only on account of wanting his soon-to-be-vacated housing?
My background is non-military (with one each, officer & enlisted, brother).
Even if they don't benefit economically, there's some value in having them feel that they are valued and have a voice at the table. Such policies can provide the popular support needed to implement other more economically optimal policies, and we're seeing this happen for example with the mayor of New York.
Important context: This paper is from 2023. In 2025, St. Paul massively rolled back rent control restrictions.
Their rent control used to have no exemptions, but now it's become very similar to SF rent control. Strict limit on how much rent can go up for current tenants, but can reset close to market rate when there's a 'just cause' vacancy. And all buildings built after X date are exempt entirely. (X=2004 in St. Paul, X=1979 in SF). Developers argued that any rent control at all limited their ability to finance housing projects.
I think results of studies like this were hugely influential to the changes in rent control that followed.
> but can reset close to market rate when there's a 'just cause' vacancy.
Unfortunate policy, and generating weird incentives to get people to leave!
In Queensland (not exactly perfectly managing the rental crisis but...) their policies include not being able to raise rent more than once every 12 months (leases tend to be 12 months). Importantly it's linked to the property, not the tenants.
There's no actual cap in practice on how much you can raise it by ("reasonable" I believe is the nonfalsifiable term used) but it doesn't generate perverse incentives to kick people out
That was the argument around the original 2021 rent control law! It had zero exemptions to avoid perverse incentivizes like that one. But it didn't last.
This seems like a lot of work looking at mostly housing prices during peak covid which is hardly a generalizable situation.
I feel the core issue isn’t wealth redistribution, it’s that rent controls create severe mismatches in supply and demand.
[dead]
IMO nothing even comes close to beating a land value tax with a citizens dividend for fixing housing and wealth distribution challenges.
Instead of repeating myself, here's the link:
https://news.ycombinator.com/item?id=48524204
Don't use Twin Cities property values in the early 2020s to draw conclusions about anything related to policy or economics. What you're actually measuring is the after shock of race riots.
Also, RHAWA is a landlord lobbying group.
Without injection of new housing stock by the state, by coops or other agencies than BTR capital investors, it's highly likely to be a weaponised outcome to prove rent controls don't work.
If the construction strike by commercial investors is replaced by public housing then the better outcome can emerge.
> If the construction strike by commercial investors is replaced by public housing
Aren't you just describing "the projects"[1]? Is that a better outcome?
[1] https://en.wikipedia.org/wiki/Subsidized_housing_in_the_Unit...
Nine months of data during a pandemic and nationwide civil unrest during the first year of a new term of a new President.
I guess I struggle to see how that's controlling enough variables over a long enough time span to be meaningful.
"Assessing effects of rent control on wealth is hard, so we threw most of that out and just used housing prices. Also, we're fairly sure that our results are good because there was nothing special happening in St. Paul in 2021 that we could figure. See this scatterplot that looks like inflation, note that the statistics we put just below it also don't look interesting but we've tied them to how rent controls are at the same time socialist and also evil and capitalist. We are objective parties to this because we say we are, please ignore the TLD we're serving this on."
You can almost hear yakitty sax playing in the background. I bet if you met the researchers you could honk their nose.
well it's not a free market anyway, and supply has been severely constrained for decades, so I'm okay with not screwing renters
Wouldn't it make more sense to remove the supply constraint?
Why not just redistribute directly? If the concern is that some existing residents will no longer be able to afford things, give long time residents a subsidy voucher.
Because it goes directly into the pockets of the landlords?
People can argue about whether that's what should happen, and there are nuances on both sides there, but that is undeniably what will happen.
We could like build more houses though
> Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%
This to me is the big one. So in addition to rents being more affordable (even if wealthier renters capture most of the gains) limiting the rental market profits also makes houses more affordable to buy? The paper is trying to argue this is bad, but I’m not seeing it.
It’s almost like “rent-seeking behavior” is a negative pejorative of an actor’s actions that negatively influence the market.
Counterintuitively, collecting rent is not considered "rent-seeking" by the econ definition, eg: https://www.investopedia.com/terms/r/rentseeking.asp
Collecting rent maps exactly to that definition.
It does not, as explained in the section "Are Landlords Rent Seekers?"
"Rent seeking" is more about making money by changing the rules instead of providing a service.
I'm not picking up any subjective, simplistic labeling like "good" or "bad." Are we reading the same paper?
Haven't fully read the paper, just the introduction and skimmed through the rest, but it seems they're merely observing that a rent control law went into effect, and given some control variables, it seems like it depressed property values.
Their findings also suggest that while the wealth transfer of rent control factor is real -- that is, landlords are impacted more and existing renters see relative benefit -- that effect is greater among higher-income renters and less among lower income renters.
Second paragraph in the Conclusion:
"While the negative wealth effects for owners are large, our results show the positive effects of the law are poorly targeted. Though the intention is to benefit lower income renters, we find that the largest benefits are received in the neighborhoods of the city in which renters have higher incomes, are less likely to be minorities, and have more education. To the extent that price drops for rental properties reflect future rent savings, and thus housing wealth gains for tenants, our results suggest that the largest cost savings are going to be realized in the neighborhoods with the richest, most educated, and least diverse owners."
It's worrying because it reduces the incentive to build more housing.
Generally reduced construction results in higher real estate prices not lower prices. Proof: look at the well studied example of California.
You can also accomplish lower prices by building more. People dont want that so one could argue it is good to make them pay for what they want.
How do you quantify "incentive"? Is a landlord really looking at 5% lower property value and deciding it's not worth investing? Is this even true in aggregate?
It is a major paradigm in economics that if you change this by X% it will change something else by Y% and to estimate that ratio. It may be that people don’t really think that way: economic growth seems to be continuous and exponential in character whereas economic dislocations are discontinuous in character.
I think of how I was absolutely shocked when a Big Mac meal was $10 during the pandemic (I think it cost about $2.50 the first time I bought it) and didn’t think I was going to buy 4% less of it but rather I skipped the fries.
[dead]
Well, there's 2 ways to become a landlord: to buy a house or to build a house. I was focused only on the second way.
The cost of the wood and the labor needed to build the house is unaffected by the rent control, so if cost remains the same, but the reward (or "revenue") from building the house decrease from $100K to $95K, then fewer houses will get built.
Yeah, sure, but only like, 10-100 fewer housing units per 100k people.
IFF there isn’t already excess demand for building in the market, and house-building is itself ‘liquid’, something that’s not necessarily true.
When supply is constrained by the availability of builders and materials, then some landlords dropping out won’t make a lot of difference there.
Yes. Since the source paper was written, St. Paul has realized that this is the case and rolled back rent control on new construction to hopefully solve the problem. (https://minnesotareformer.com/2025/05/08/st-paul-walks-back-...)
So they're losing out on a few dozen new units, but it is made up for by renters across the board having to pay less rent and thus having more money to put into the economy? Seems like a good trade to me?
Because then the units fall into disrepair (because they no longer make sense to maintain) leading to less supply leading to lower availability of units leading to higher cost of housing.
See what happened in NYC regarding the consolidation of housing units.
Where in the paper do the authors try to argue that this is bad?
i see nobody read the paper.
> Similarly, we need to consider any one-time confounding events in control cities. Most notably, Minneapolis would be a natural control for St. Paul. However, in addition to the ballot measure on rent control, Minneapolis’s ballot also included referenda on mayoral power and policing. These confounding events mean that if property values in St. Paul changed relative to Minneapolis, we could not attribute the change to rent control.
their mistake is that they excluded Minneapolis for a bullshit reason here. you might as well do the analysis and then tell us. of course, they did, and found all the same effects as st. paul despite no rent control, so they chose not to talk about it.
This makes me wonder if these cities are a good study subject in the first place.
Is this a metro area with serious rental price pressure where rent stabilization is greatly altering the market conditions, or is housing so available to begin with that it’s more of a feel-good legislation that doesn’t shift prices around?
It looks like from a quick search that over half of people in this metro area own their own home.
I imagine that rent control in many Midwestern metros is effectively pointless. The rent is already being controlled by flat or declining populations, cheap land, and high homeownership rates.
I mean, it's no SF, but Minneapolis definitely has an affordability problem. Every major city does.
I disagree with your last sentence conceptually. It took me about 20 seconds to find a good condition 3 bedroom home in Cleveland, OH in a well-kept neighborhood for $150k.
https://www.zillow.com/homedetails/4122-W-145th-St-Cleveland...
A lot of the Midwest just doesn’t have housing pressure. Maybe Minneapolis does, maybe Columbus does, but a lot of the other cities do not.
From the abstract:
> Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%.
Why is this bad? Pretty much every Western society has fallen into the trap of raising property prices as a politcal imperative. People who own 1 (maybe 2) homes believe it's good for them but it only benefits very wealthy people who hoard land.
The real problem is that ever-increasing property prices destroys the fabric of society. It's a wealth transfer from the next generation to older and wealthier people that creates a drain on their entire lives. It's justified by people arguing the current young people will be able to do that to the generation after them. But this can't go on forever.
Want to know why eating out is so expensive? Why third spaces have disappeared? Why basically everything has gotten expensive? it's housing prices. Commercial rent is an input into everything that you buy. Higher costs mean higher wages that need to be paid, which is also an input into everything you need to buy. And the only one who is winning out of all of this is the landlord. If the commercial rent is too low well then it'll get torn down or converted into residential real estate because that's more profitable.
You know who realized this? Xi Jinping [1]:
> Houses are for living, not for speculation
So the Chinese property speculation bubble was quietly popped a decade ago and Chinese real estate has been in a severe and prolonged recession ever since as the market corrects. What's funny is media coverage points this out like it's a problem. It's not. It's intentional.
And if you think that's a purely socialist/communist idea, tell that to Adam Smith [2]:
> As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce.
He had this in common with Mao [3].
So if Marxists, Leninists, Maoists and capitalists all agree that landlords are parasitic, what are we doing?
There's a British former wealth manager and economist named Henry Fudge who has done the math on how the housing market is a "rentier black hole" (as he describes it) on the UK economy and has hollowed out manufacturing as an inevitable consequence when returns on housing exceed all asset classes. It becomes a self-fulfilling prophecies and housing enjoys significant tax advantages and government protections. He calls it The Housing Theory of Everything [4].
Rent control is a bandaid. The solution here is for the government to become a significant provider of housing, as is the case in Vienna [5] and to stop treating housing as a speculative asset. Attacks on rent control are generally a thinly-veiled effort to increase landlord profits however.
We're rapidly re-inventing feudalism here with 1 (and soon more to come I'm sure) trillionaire who will increasingly hoard all the land and assets, leaving the rest of us as impoverished tenant workers who own nothing. Most call this neofeudalism for this reason.
[1]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for...
[2]: https://www.prosper.org.au/geoists-in-history/adam-smith-on-...
[3]: https://thirdworldtruth.medium.com/not-just-mao-but-adam-smi...
[4]: https://henryfudgeofficial.substack.com/p/the-housing-theory...
[5]: https://www.theguardian.com/lifeandstyle/2024/jan/10/the-soc...
[dead]
[flagged]
Can you please stop posting low-substance comments like this on HN? This comment was jarring to read, as it's effectively an editorialized summary of the article, posted with little apparent thought, and doing nothing to cultivate curious conversation. This is exactly the kind of commenting we're hoping to avoid here. Looking over your comment history, most of your comments are like this. It's a hallmark of a low-thought pattern of commenting that many of the comments don't even wrap to a second line or end with a period.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
The current cohort of renters wins. All future renters lose, because the rent-controlled apartments are never re-leased. People sit on them forever.
Price ceiling is the surest way in economics to create a shortage.
Why would they sit on them?
Surely they are more likely to sell if they can never be leased profitably? This would put that capital to better use.
Your assumption there is also that the class of ‘renters’ is homogenous and wants to rent. In some cities there is a significant class of people who are forced into continuing with renting because of supply constraints on homes for sale, which are exacerbated by landlords with superior access to leverage buying up stock and pushing up prices. In this situation the landlords actually create their own market.
A comparative shortage of rental properties and of landlords could be very desirable, as it implies more owner-occupiers.
It also implies more capital flowing out of real-estate and into productive industry, which one would assume is also desirable for a thriving economy.
You don't need to ask this question when you can readily observe a century of economic data on rent control. People do all kinds of acrobatics to avoid giving up their rent controlled apartments.
Why wouldn't they? They are locked in at a price that was frozen in time and can't increase. And there is a thriving black market for re-leased rent-controlled apartments. (black markets always occur when supply is artificially restricted).
You're posing a hypothetical that only happens in an alternate universe where the foundational ideas of economics and human behavior don't apply.
> A comparative shortage of rental properties and of landlords *could be very desirable*, as it implies more owner-occupiers.
Ok so 2/3rds of the way through your case you've already moved the goalposts. Here's a reality check for you: a dwelling is a dwelling, whether it is rented or owned. Rent control always and everywhere produces a shortage of dwellings. This hurts everyone.
Lower rent cannot be legislated any more than waterfront mansions for everyone can be legislated. It would be wonderful, if true. But it is not.
What happens is that economics shift from a renewable model to an extractive model.
Farms are renewable so farmers maintain them over centuries. Mines are extractive so they get pumped and dumped.
What landlords do in these situations is try to extract as much money as possible before the enterprise collapses, either literally or figuratively. New housing doesn't come online quickly so both quality and quantity fall.
Well, this is a reason that we have standards and laws about rentable properties.
Landlords who can’t operate within the imposed constraints, those for instance who have debts they used to get into the game in the first place, might simply be forced to leave the business.
In many markets this is actively desirable.
If you don't mind investors being unwilling to do new construction. It's a band-aid on a much bigger problem.
I don't mind ending the type of construction that's recently been occurring.
Thou shall have luxury apartments which are sprouting up everywhere in America. Where the elevators don’t work, but you do have amenities and you have top and bottom left right stereo, you can hear your neighbors above below and to the left and the right. As a bonus you also get to have extra company to help pay the rent.
Rent control has nothing to do with this bonus accommodation. This is directly out of the sharecropper, subscription own nothing playbook.
That depends on the market. I’m not familiar with St Paul Minnesota, but here in Perth, Western Australia this is raised as an argument every time someone proposes anything to do with rolling back investor tax breaks. That and “there will be no rentals!”
The truth of the situation here is that there is more than enough demand for new housing anyway, directly financed by wannabe homeowners, that ‘investment’ goes 90% into existing stock, not new builds, and that investment properties actually create rental demand as investors crowd out would-be owner-occupiers from both existing houses and new-build opportunities.
In Melbourne, where measures to reduce the attractiveness of investment have already happened, the price of housing has levelled off comparative to other capitals in Aus, and rental availability has actually gone up.
The underlying problem is of course supply, but there appears to be a limit to how fast the building industry can actually build more stock, so with huge demand and limited supply, we don’t need to encourage as much speculation or landlordism in the market to get more built. All it does is add heat and pump prices.
All of the capitalistic English speaking countries today are suffering, the same problem and it ain’t because of rent control, starter houses/homes are not being built for the most part and no affordable apartments are either it’s come down to you shall rent for the rest of your life, and live in a luxury apartment doubled up with roomies, or enjoy living in a car or van on the road.
That modern day tenement apartment is now known as a luxury apartment with the amenities courtesy of an equity company.
There's even a new word for it: "rent-seeking", if you're my age you remember the Ropers as a kindly awkward couple. And Mr. Furley as kind of a weirdo but landlords were never associated with corporate greed for me generation. I realize that situation has changed and I feel for these poor kids.
Heck I remember renting a full house in decent (not great) neighborhoods for $300 which was earnable in a single day.