The lessons of Prohibition in Minnesota
One hundred years ago today, the 21st Amendment to the Constitution was ratified, the first line of which read: The eighteenth article of amendment to the Constitution of the United…
When both Minneapolis and St. Paul proposed rent control on their ballots, American Experiment warned that passing such a policy would deter construction.
This has come to pass in St. Paul. Indeed since rent control passed in November 2021, the city has seen housing permits drop significantly, compared to its neighbor.
According to data from the Department of Housing (DUH), while in 2022 Minneapolis saw a rise in its multi-family units, St. Paul saw its permits decline by almost 50 percent.
Prior to the passage of rent control, permits had been on the rise in St. Paul. In 2021, they flattened, and then significantly declined in 2022.
In Minneapolis, on the other hand, permits declined between 2019 and 2020, and slightly so in 2021. However, they rose in 2022, and are higher than their 2018 levels.
Figure 1: Total permits for multi-family units, per year
While permits are up in Minneapolis compared to St. Paul and compared to last year, they are nowhere near where they were when they peaked prior to the pandemic in 2019. Data from the DUH shows that permits in Minneapolis are still 23 percent below their 2019 peak.
Moreover, beginning July of this year, permits have been down consistently — on a six-month rolling average — which could indicate that construction recovery has peaked and is on its way down.
Not to mention, much of the rise in construction in 2022 was is due to growth in taxpayer-funded “affordable housing” due to public spending as reported by the Star Tribune. In 2022, 919 of the total permits were for taxpayer-funded units, while between 2019 and 2021, the annual average was only 634 — a growth of 45 percent.
Private construction has not seen such growth, however, which could be a sign of slowing private investment in the Minneapolis housing sector.
Compared to St. Paul, Minneapolis fared better in 2022 when it comes to housing construction. However, the city is nowhere near its pre-pandemic levels, and construction seems to be on a downward trend.
With the Minneapolis City Council looking into enacting rent control, these numbers should provide caution, especially given what has happened in St. Paul.
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The legislature appropriates more money, the unions grab it for salaries, the school board cuts middle school band, and everyone blames the legislature for underfunding. Rinse and repeat.