Why rent control does not explain St. Paul’s falling rents
Rents are falling in St. Paul, according to Zillow data — a welcome development for renters. While it might be tempting to attribute falling rents to the success of rent control, a similar trend is evident in Minneapolis and other Minnesota cities, showing that St. Paul is merely part of a broader Twin Cities phenomenon.
According to the Federal Reserve Bank of Minneapolis‘ St. Paul Housing dashboard, median rents in St. Paul were down over 7 percent between 2021 and 2026. Rents also fell in other cities such as Bloomington, Minneapolis, Eagan, Eden Prairie, and Woodbury — none of which have rent control. Among the six largest cities close to St. Paul, only Brooklyn Park saw rents rise during the same period.
But while rent control is not driving price reductions, its effects on the overall housing market are not nonexistent.
Both Minneapolis and St. Paul saw building permits for multi-family housing fall after 2021. However, permits fell in St. Paul a year earlier than in Minneapolis, suggesting an immediate effect of the rent control ordinance. Interviews conducted by the Minneapolis Fed corroborate this chilling effect on multi-family construction in St. Paul.
In one example interviewees cited, after the adoption of rent stabilization the developers of a large market-rate apartment building in Highland Bridge, a 135-acre mixed-use redevelopment on the former site of a shuttered Ford assembly plant, suspended construction for several years.
What explains falling prices?
Falling housing prices mean a contraction of the property tax base, which could shrink local revenues. If levies must remain the same, single-family homeowners will have to shoulder a disproportionately growing share of the tax burden, particularly given declining office values.
Indeed, according to the housing dashboard, the median property tax collected per apartment unit in 2025 was $1,958. This was down from $2,825 in 2020. On the other hand, a typical single-family home paid $4,264 in property taxes in 2025 — up from $3,442 in 2020.
Fixing this disparity requires understanding why it is happening in the first place.
Ultimately, prices could be falling for two reasons. Either the Twin Cities metro is creating a lot of new housing, pushing prices down, or demand is softening. Unfortunately, however, permitting data casts doubt on the first theory.
Housing permits in St. Paul peaked between 2019 and 2021. After landmark reform in 2023, St. Paul permitted more “missing-middle housing” — such as duplexes and triplexes — in 2024 than in the previous nine years combined. However, the city issued a total of 404 housing units in the same year — about a third less than in 2023. In 2024, Minneapolis also permitted 452 housing units, down from over 3,000 in 2023.
Therefore, declining demand is what’s likely causing falling prices, especially given that other places, such as Madison, Wisconsin, have added more housing but have seen rising prices.
In several Minnesota cities, like St. Louis Park, sale prices are reverting to pre-pandemic levels. This could indicate a general rebalancing of the housing market, requiring localities to adjust their budgets accordingly.
A more concerning possibility, however, is that of growing economic distress — or that more people are choosing to live and work elsewhere, not in the Twin Cities. An analysis by the Minneapolis Fed found that such a negative demand shock occurred in Minneapolis in 2020 and 2021. A negative demand shock, if it has persisted, would mean that other policy solutions are necessary to make the Twin Cities region more competitive.
Demand and supply reign supreme
Nevertheless, even if economic shifts are driving declining demand, the resulting drop in rent prices presents a complex silver lining. Given rising affordability concerns, widely falling rents are welcome news. They are a sign of a working market, rather than the success of destructive policies such as rent control.