Does Rent Control Hurt Tenants? Minneapolis vs St Paul Rent Data Says Yes

Every time I review Housinglink’s monthly data on rent in Minneapolis and St Paul, I’m reminded what a terrible policy rent control is for tenants. And, in a roundabout way, what a great idea it is for housing providers.

If you’ve followed me for any length of time, that sentence likely made you believe I’ve lost my mind. So let me explain.

Every single month, Housinglink’s report shows that St Paul’s median rents either rose more or declined less than in Minneapolis.

St Paul has rent control. Minneapolis does not.

For example, January’s median rent for a 1-bedroom apartment in St. Paul rose 1% year over year to $ 1,100 from $ 1,092. Meanwhile, Minneapolis saw a 2% decline, falling to $1125 from $1150.

St Paul saw median rent for a 2 bedroom unit decline 1%, from $1467 to $1448. Minneapolis saw a 5% decline, falling to $1450 from $1525.

Both cities saw year-over-year increases in 3 bedroom units. Minneapolis’ median jumped 5%, from $1848 to $1936. Meanwhile, St Paul saw just a 1% rise, finishing at $1900; up $24 year-over-year.

My theory as to why rent control causes rising rent is housing providers are afraid to skip a year of increases and not be able to play catch-up later. So, if the maximum increase is 3%, as it is in St Paul, they raise it the maximum every year. A Minneapolis landlord, however, doesn’t have that fear. They can raise the rent when needed, and skip it when it isn’t. So they do.

Based on the common tenant screening requirement that income be 2.5 times as much as rent, in Minneapolis,  one-bedroom residents must earn $2813 a month, $3625 for a two bedroom, and $4840 for a three bedroom. In St Paul, those incomes are $2750,  $3619 and $4750.

Vacancy rates in duplexes, triplexes and fourplexes also fared better in Minneapolis than its sister city. Of all the city’s vacancy’s, just 15% were found in condos, townhouses, duplexes or small multifamily properties. This represented a 2% year-over-year decline. St Paul’s smaller units were responsible for 17% of the city’s vacancies; up 2% year-over-year.

In St Paul, there are 12,543 rental units in one and two unit buildings. Minneapolis has 23,298 units in comparable buildings.