Wednesdata - St. Paul Rent Control Apocolype?
I'm more skeptical than I'd have assumed
Over at Slow Boring’s Sunday Open Thread a few weeks ago, a commenter asked about St. Paul’s rent control ordinance that was passed in 2021.
There have been some local news stories about rent control stalling out development projects:
Something worth checking out. The great thing about these heroic commentators at Slow Boring is that they provided links to HUD residential permitting data. So … I grabbed it and took a look at St. Paul’s permitting change over time.
My conclusion is that St. Paul will likely be in a pretty bad state because of this policy change. But not all hope is lost. And 2022 doesn’t necessarily signal a housing permit apocalypse.
Let’s start by just looking at Ramsey county versus Hennepin county (St. Paul in Ramsey versus Minneapolis in Hennepin). For simplicity, I’m going to look at all permits.
Uh oh. This looks pretty bad. Hennepin increased its total permits by about 9,500 between 2021 and 2022. We might see a plummeting of St. Paul’s, from a consistent 3,000 to 2,000. That would align with a rent control story.
But we started at 2019. Let’s look at the entire time series available to us.
Huh. Hennepin has been on a tear recently, massively boosting their permits from about 1,500 during the depths of the Great Recession to about 9,000 today. St. Paul has been really pushing on upping its permits between 2010 and 2021. In fact, 2021 matched the mid 1980s in terms of the highwater mark of annual permits issued. 2022 is still pretty high, historically.
However, we are only comparing Ramsey to Hennepin, and Hennepin is pretty odd in terms of its aggressive housing push (I went to a lunch with Minneapolis’ mayor, Jacob Frey, and he talked about how the one main passion that got him to run was increasing Minneapolis’ housing stock). The Twin Cities are made up of a bunch of counties:
I’m going to add the “inner ring” counties (e.g. the suburbs closest to the city core) and the “east side” non-Wisconsin counties (the ones that should be relatively similar to Ramsey.
Let’s take a look at the trends.
Huh. Hennepin is really weird in its massive, aggressive push to increase residential permits. Look at the dashed black line compared to other Twin City counties. Through ~ 2015, Ramsey was kind of a low-permitting laggard compared not just to Hennepin but also other Twin City counties. Like, look at the late 1990s - Ramsey had the fewest residential housing permits.
Then, from the early 2010s to 2021, it looks like Ramsey pushed pretty hard to increase its residential permits. For the first time since the early 1980s, Ramsey was issuing as many or more residential permits as any of the other Twin City counties, sans Hennepin.
Also look at the other high-ish permitting counties - Anoka, Dakota, and Washington. Though not as extreme, they also had residential permits decline between 2021 and 2022. I wonder if this is a general interest rate effect that is blunted in Hennepin by an aggressive housing policy scene?
Let’s take a look at the logged values to see if there’s any differentiation among the lower permitting counties, Ramsey included .
2022 could be the beginning of a downswing in Ramsey county. But it also kind of looks like the year-over-year jagged increase that Ramsey was undertaking over the past 12 years. Ramsey county has pretty volatile permitting rates, it looks like. You can also see the recent push to really up Ramsey permits.
So all things considered:
Rent control is and was a bad policy. I’m sure it will produce negative consequences for the city.
Maybe there will not be a massive effect, as city officials worked pretty aggressively to make a bunch of carve outs and exemptions.
There’s some evidence of a decline in residential permitting in Ramsey county following the 2021 rent control policy change.
…however, if we compare Ramsey not just to Hennepin but to a bulk of Twin City counties over a long period of time, it’s a bit hard to differentiate a rent control apocalypse from a preexisting jagged and volatile residential permitting increase. It may be coming! We probably need two more years of data. But I don’t seem an immediate, obvious effect.
Minneapolis, on the other hand, obviously is doing something very important and strange with its massive movement to build housing over the past 15 years. Although Minneapolis is inferior to Saint Paul on nearly all dimensions that matter,1 here it gets to claim victory.
Grace, dignity, quantity of VanHeuvelen residents