How St. Paul’s Rent Control Experiment Backfired Spectacularly

In 2022, politicians in Minneapolis and St. Paul, Minnesota, voted for rent control.

I said that would lead to bigger problems.

Was I right?

My update video reveals what happened.

St. Paul politicians pushed rent control, saying rent caps would stop “unfair profiteering.”

But what the heck is “profiteering,” and how is it different from “profit”? Who decides what is “unfair”?

The opportunity for profit is what persuades people to invest in things. And build things. If enough people invest in new housing, rents will stop shooting up.

That’s just how markets work.

It’s why studies show that rent control reduces the supply of housing and gradually raises prices.

But activists don’t pay attention to those.

“We don’t need more studies,” says one in my video. “We need action.”

St. Paul’s actions were strict—its rent control law made no allowance for inflation.

“It’s just going to shut down construction,” said Mercatus Center economist Salim Furth. “Why would you enter a market where it seems like the government is actively trying to hurt you?”

At least St. Paul has a “twin city,” Minneapolis, so frustrated builders could move just a few blocks and build something there. They did just that. Construction increased there.

Minneapolis politicians had also voted for rent control, but they were wary about imposing it. That was smart, since new housing collapsed in St. Paul.

But Minneapolis City Council Member Aisha Chughtai was unconvinced. She wants more rent control, telling me, “You don’t have a city” if people “can’t afford to live there.”

I pushed back: “The way you have a city is if people build apartments and houses. That’s what eventually brings the price down.…Builders still build in Minneapolis—building permits were up.…But in St. Paul, they’re down 60 percent because of rent control. You’re not going to get more apartments by pushing this.”

Her response was something new for me after 50 years interviewing people: 17 seconds of silence. Finally, she said: “Guaranteeing housing for people and making sure that they can stay in their homes matters more than anything else.”

Chughtai calls herself a socialist. I ask her, where has that ever worked?

After another long, awkward pause, she says, “I’m doing a fine job of representing my community.”

I wish socialists would just spend a little time reading economics or history.

Rent control once destroyed much of New York City.

Because they made it hard for landlords to profit, many landlords just stopped doing maintenance.

“They don’t take care of their properties,” says Furth. “They don’t send a plumber promptly when water starts leaking.”

Or worse: The documentaries The Bronx Is Burning and Decade of Fire document how landlords, unable to profit, set fire to their own buildings.

So what’s happening now in St. Paul, four years after its clueless politicians imposed strict rent control?

There was so little new construction that the politicians rolled most rent control back.

In sister city Minneapolis, socialist Chughtai has been promoted to majority leader. But the Minneapolis council never did impose rent control, and the mayor pledges never to impose it.

I’d think politicians would learn from St. Paul’s failures. But no, not my new socialist mayor, Zohran Mamdani, who just froze rent on a million NYC apartments.

Give me a break.

Already, 57,000 NYC apartments sit vacant because existing rent stabilization laws make it unprofitable for landlords to repair them.

The late economist Walter Williams was right to say: “Short of aerial bombardment, the best way to destroy a city is through rent controls.”

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