Rent Control Pushes St Paul Rents Higher

If there’s ever been a case against rent control, it can be found in Housinglink’s monthly rental housing brief for the cities of Minneapolis and St Paul.

With some exceptions, St Paul has a cap on annual rent increases of 3%.  August’s data suggests this policy is not resulting in declining rent. For example, the median rent on a 1 bedroom apartment in August rose to $118 per month from $1099 one year ago. That’s an increase of 8.2%. Two bedroom units rose from $1499 to $1502 year-over-year; an increase of just .002%. Three bedroom units rose to $1962 from $1950.

Compare this with Minneapolis, which does not have a rent control ordinance. The median rent for a 1 bedroom unit in August was $1195. This represents a year-over-year decline of 2.4%. Two bedroom units fell 6.1%, from $1598 to $1500 a month. Three bedroom units broke the pattern, increasing 5% year over year to finish at $1995.

One might think the necessary monthly income to rent in each city is somehow wildly different. That isn’t the case. In St Paul, a resident must earn $2954 to qualify for a 1 bedroom unit. In Minneapolis it’ $2988.For a two bedroom St Paul renters must bring home $3754 a month, while Minneapolis residents earn an average of  $4 less per month. Three bedroom residents in St Paul generate an average income of $4905 per month, while in St Paul it’s $4905.

The market share of vacancies by building type is where some differences emerge. Last August and this, 79% of all of St Paul’s vacancies were found in apartment buildings. Seven percent of this year’s were in single family homes. This was a drop of 1% year over year. The remaining 13% of the vacancies were found in condominiums, townhouses and duplexes.

Minneapolis on the other hand found 70% of its vacancies in apartments. This was a year-over-year decline of 8%. Ten percent of the vacant units were single family homes; an increase of 3%. Condo, townhouse and duplex owners found themselves with 20% o the city’s vacancies; up 5% year over year.

August saw Minneapolis with a 3% year over year increase in the total number of licensed rental units to 114,492. Tier 3 rental licenses dropped 33% year over year to 2355. Duplexes and single family rental licenses totaled 23,144; down 1% year over year. There was a 5% decline in the number of short-term rental licenses to 1608.

St Paul  saw no change with 70,720 units. St Paul experienced a 2% decline in C and D grade properties to 2309. However, the number of rental units found in 1 and 2 unit buildings remained constant at 12,543.  There were 450 active Airbnb rental licenses in the city.