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Does Rent Control Cause Significant Drop in Multifamily Permits? Evidence From Montgomery County, MD

Multifamily building permits in Montgomery County, Maryland, have nearly vanished in the year after the county adopted rent control, raising fresh questions about how far such policies can go without choking off new housing supply.

Using state permitting data, housing analyst Jay Parsons found that from January through August 2024, before rent control took effect in July, Montgomery County issued building permits for 2,093 multifamily homes. During the same period, all other Maryland counties combined issued 2,274 multifamily permits.

In the first eight months of 2025, Parsons said, the picture flipped. Montgomery County issued only 54 multifamily permits, while the rest of Maryland stayed roughly level at 2,248 permits.

Parsons framed the shift bluntly.

“Poof! Multifamily building permits have almost entirely evaporated in one of the nation’s most affluent areas — Montgomery County, MD,” he wrote, arguing that “there’s one clear driver… Rent control.”

According to Parsons, “Montgomery County plunged, while the rest of Maryland held steady — leaving little doubt that rent control crushed MoCo’s development pipeline.”

He noted that the county did exempt new construction from rent control, but only for 23 years, and said that limitation is out of step with how long-term investors think about apartment buildings and resale values. In his view, the looming expiration date makes properties less attractive to future buyers, reducing values and discouraging new projects.

Parsons also linked Montgomery County’s experience to St. Paul, Minnesota, which enacted rent control in 2021 and, he argued, “left itself on the sidelines of the nation’s biggest apartment development boom in a half century.”

The Montgomery County numbers arrive amid a long-running national debate over whether rent control can protect tenants without suppressing new construction.

Economists and housing researchers have been studying the question for decades, and the evidence points in both directions.

A 2019 study by Stanford economist Rebecca Diamond and co-authors on San Francisco’s 1994 rent control expansion found that the policy produced large benefits for tenants who were covered and reduced their risk of displacement, but also led many landlords to convert rental units to condos or owner-occupied housing.

The authors reported that “landlords treated by rent control reduce rental housing supplies by 15 percent,” and concluded that the resulting loss of supply likely pushed overall market rents higher over time.

Earlier work on Cambridge, Massachusetts, looked at what happened when strict rent control was abolished in the mid-1990s.

Economists David Autor, Christopher Palmer and Parag Pathak found that ending rent control triggered significant new investment in housing and large gains in property values, both in formerly controlled units and in nearby buildings, suggesting that the earlier regime had discouraged maintenance and reinvestment.

At the same time, a growing body of research documents meaningful benefits for tenants who live in regulated units.

An Urban Institute review of rent control literature noted that “most broadly, the key goal of rent-control laws is to maintain existing affordable housing,” and summarized evidence from San Francisco, New York and Cambridge showing that rent regulations lowered rents for covered households compared with similar homes without controls.

The same review highlighted studies finding that tenants in rent-controlled homes move much less frequently than those in market-rate housing, suggesting that rent control can act as a buffer against displacement caused by rising prices.

A 2025 literature survey from the D.C. Policy Center reached similar conclusions about tenant stability.

It reported that the longer a household remains in a rent-controlled home, the larger the discount compared with market rents, and found that this effect is especially strong for older residents and people of color.

The report noted that, by lowering housing costs, rent control “allows tenants to allocate more of their income to non-housing needs, effectively increasing their disposable income.”

Not all research finds large negative supply effects.

The Urban Institute review pointed to a study of several New Jersey cities with relatively weak rent control rules—systems that exempt new construction and guarantee annual rent increases—which “found no significant decreases in rent relative to cities without rent control.”

The authors suggested that the design of policies, and the flexibility they give landlords to cover costs, may explain why some jurisdictions see fewer side effects.

More recent international work underscores that design matters.

A 2024 survey of global rent control studies by economist Konstantin Kholodilin concluded that rent control consistently improves affordability and stability for tenants in regulated homes but also tends to generate “multiple other effects,” including reduced construction of new rental housing, conversion of rentals to other uses and misallocation of who occupies scarce units.

New research on California cities also points to mixed outcomes.

A 2025 study evaluating “rent control intensity” across the state found that jurisdictions with stricter rent regulations tended to have slightly higher median rents and higher shares of cost-burdened renters overall, even as incumbent tenants in stabilized units benefited from lower and more predictable rents.

Taken together, the Montgomery County experience and the broader research suggest that rent control almost certainly trades off some level of new supply and investment in exchange for stability and lower rents for people fortunate enough to obtain regulated units.

How sharp that trade-off is appears to depend on how strict the laws are, whether new construction is permanently exempt and whether governments pair rent regulation with aggressive efforts to add housing.