Achieving housing stability starts with improving the housing supply
Few things in life are as important as shelter. So, it is understandable that a lot of effort has been dedicated to ensuring access to affordable housing. But there seems…
Prior to the passing of rent control in the Twin Cities, American Experiment published a report detailing the harmful effects of rent control and why it should not be passed. One of the most harmful effects of rent control that we talked about in great detail was the fact that rent control discourages the production of new housing.
This is because rent control reduces future expected profits from investment in the housing industry. Therefore, developers, landlords and investors are discouraged from undertaking economic activity in the housing sector.
We did emphasize the fact that St. Paul’s ordinance would be especially more damaging since it did not include provisions that are common in most cities, like exempting new constructions.
Lawmakers around the country are not blind to the negative consequences of rent control. And because of that, new ordinances include provisions that are supposed to mitigate these negative consequences. The St. Paul ordinance, as currently passed, possesses none of these provisions. No wonder developers are pausing projects due to the uncertainty surrounding the law.
And it is not too surprising that St. Paul’s Mayor Melvin Carter is already asking for amendments to the law — just a week after it was passed. As reported by the Star Tribune, while Mayor Carter has not described how he would amend the ordinance, he has indicated that he will ask the city council to exempt new housing from St. Paul’s rent control law.
As I explained in our report, the current St. Paul proposal is very restrictive and would only amplify the negative consequences that other cities with rent control have faced. So to some extent, some modifications would be an improvement.
But nevertheless, rent control is a proven disastrous policy and no number of modifications would change that. St. Paul residents will simply have to live with the consequences that come with suppressing rental market prices.