Media

Rent Control and the Ruin of the Housing Market: Unpacking the DSA, Part 8

Housing is one of the most emotional battlegrounds in public policy. For a massive portion of our neighbors inside the city limits of Minneapolis, the monthly rent check is the single largest line item on their ledger. When rent prices climb faster than wages, the panic it creates in a family household is entirely real.

It is precisely because of this genuine anxiety that the newly published political platform of the Twin Cities Democratic Socialists of America (DSA) leads with a demand that sounds like an instant, cost-free shield for tenants. The platform explicitly calls to: Pass rent control.

On its face, it is a brilliantly seductive piece of political marketing. Why not simply pass a law making it illegal to raise rents past a certain percentage? It feels like an immediate win for the working class, achieved by the stroke of a legislative pen.

But as we have uncovered throughout this series, paper is incredibly patient, but the real world is unyielding. In the realm of housing economics, rent control is the ultimate policy siren song. It is an economic reality so well-established that it achieves rare cross-ideological consensus among economists: capping the price of housing below market rates is the single most effective way to destroy the quality and availability of the very housing stock you are trying to preserve.

The authors of the DSA platform treat housing as a fixed pool of assets owned by wealthy, cartoonish landlords who can easily absorb a forced cap. But real estate capital is highly mobile, fluid, and deeply risk-averse. When you artificially suppress the return on housing investments, the consequences do not fall on the wealthy; they fall like a hammer on the construction workers, the independent housing providers, the city budget, and the tenants themselves.

We do not have to theorize about this economic law. We can look at three devastating, data-driven examples from across the nation—including an active disaster right across the Mississippi River.

The Tri-City Warning: A Tale of Three Collapses

When a localized price control is implemented, the response from the development community is not a slow adjustment; it is an immediate freeze. Let’s look at three mid-to-large jurisdictions that tried to defy the laws of supply and demand.

1. St. Paul, Minnesota: The Local Warning Label

In November 2021, voters in our twin city of St. Paul passed what was widely heralded as the strictest rent control ordinance in the developed world—a rigid 3% cap that applied to all residential housing, with no exemption for new construction and no adjustment for inflation.

The fallout was nearly instantaneous. Within mere months of the vote, multi-family housing building permits in St. Paul plummeted by over 80% as developers immediately pulled the plug on thousands of planned units and moved their funding across the border. The capital flight was so rapid and severe that by September 2022, an embarrassed St. Paul City Council was forced to execute a massive, retroactive retreat, voting to exempt new construction for 20 years just to coax builders back to the city. Despite this glaring red flag on our eastern border, the progressive majority on the Minneapolis City Council has spent years trying to push an identical 3% cap onto our own local ballot.

2. Montgomery County, Maryland: The Instant Freeze

If advocates believe St. Paul was an isolated Midwest anomaly, they ought to look out East to Montgomery County, Maryland—a highly urbanized, affluent county of over one million residents directly bordering Washington, D.C.. In July 2024, the county enacted a strict rent stabilization framework.

The result? An immediate, catastrophic 97% drop in building permits for multi-family housing developments. Residential projects require hundreds of millions of dollars in institutional loans. The moment a local government tells lenders that future revenues are capped by a political board rather than market realities, those projects instantly become un-bankable. Billions in construction capital evaporated from Maryland overnight and sailed across the state line into the unregulated sub-markets of Virginia.

3. Portland, Oregon: The Long-Term Doom Loop

Look further west to Portland, Oregon, where a multi-year experiment with rent caps has choked the residential pipeline down to a ten-year low. Oregon passed the nation’s first statewide rent control law in 2019, capping increases at inflation plus 7%. Proponents claimed this buffer was mild enough to protect development.

But by late 2025 and into early 2026, the long-term compounding effects of the regulation triggered an absolute collapse in local housing production. A review of city permitting metrics revealed that Portland went from permitting residential housing projects worth an estimated $1 billion in 2016 down to just $300 million in 2025. That represents a stunning 70% collapse in the total value of new housing investments.

The Labor Fallout: Killing the Building Trades

When you freeze residential construction by passing a rent cap, the primary casualty isn’t the developer sitting in a corporate office; it is the blue-collar worker wearing a hard hat on the job site.

Multi-family housing developments are the lifeblood of our local building trades. Thousands of high-paying, union construction positions—carpenters, electricians, plumbers, ironworkers, and laborers—rely on a steady pipeline of new apartment complexes moving through the municipal zoning process. When multi-family building permits drop by 80% or 97%, those jobs simply vanish. A localized rent control mandate inside Minneapolis is, in practice, a pink slip for the very union labor force that drives our regional economy.

The Deterioration Trap: Turning Buildings into Liabilities

The second major consequence of rent control occurs within the existing housing stock. Real estate is not a passive asset; it is an active operational business. Over the last few years, housing providers across Minnesota have faced massive, unprecedented upward pressure on their primary operational expenses: commercial property insurance spikes, skyrocketing utility bills for heating and water, and inflation on basic building materials.

If a landlord’s operational costs rise by 8% to 10% in a single year, but a government rent control ordinance legally caps their revenue increases at a hard 3%, the math becomes impossible. The building’s net operating income shrinks toward zero.

To survive, housing providers are forced to turn to the only dial they can control: deferring routine maintenance. Roof replacements are delayed, old boilers are patched instead of upgraded, and cosmetic upkeep halts completely. Over a decade, rent-controlled housing stock systematically degrades into urban blight. Tenants find themselves trapped in crumbling, un-maintained buildings because the law has made it financially impossible for the owner to invest back into the property.

The Municipal Tax Hit: Punishing Homeowners

There is a direct, mathematical connection between an apartment building’s rental income and the city budget. In public finance, commercial properties are valued using an income-capitalization approach—meaning a building’s assessed market value is based entirely on the net income it generates.

When a rent cap depresses a building’s income, the market value of that property plummets. When property values plummet, their commercial property tax assessments drop right alongside them.

But city halls do not reduce their spending when property values fall; they still have to fund public schools, maintain parks, and pay for emergency services. If the commercial property tax base shrinks because rent control has cratered the value of apartment buildings, the local tax burden must automatically shift.

Who picks up the tab? Everyday, middle-class residential homeowners. Mom-and-pop homeowners inside Minneapolis would face steep, aggressive property tax hikes to make up for the multi-million-dollar deficit left by a collapsed commercial real estate market.

The Spatial Distortion: Suburbs Win, Minneapolis Loses

Finally, we must look at the geography of the Twin Cities metropolitan area. Minneapolis is surrounded by a contiguous ring of independent, first-tier suburbs. If Minneapolis passes a localized rent cap and places a regulatory wall around its borders, it hands an immediate, taxpayer-funded competitive advantage to our neighbors.

A developer looking to build a 200-unit apartment building will seamlessly shift their project across the city line into Edina, Richfield, Bloomington, or St. Louis Park. The suburbs get the modern, energy-efficient housing stock, the influx of new residents, and the expanding property tax base. Minneapolis is left with stagnation, an aging housing stock, and a growing housing deficit.

Furthermore, rent control creates severe societal misallocations. Because rent-controlled apartments become artificially cheap over time, tenants treat them as hyper-valuable commodities and never leave, even when their life circumstances change completely. An empty-nester might occupy a large, rent-controlled three-bedroom apartment for thirty years because it is cheaper than downsizing, while a young, growing family is entirely locked out of the market. Desperate tenants are forced into an unregulated underground housing economy, paying massive under-the-table “key money” fees and dealing with illegal sublets just to secure a roof over their heads.

Conclusion

The desire to shield working families from soaring housing costs is entirely commendable. But the Twin Cities DSA’s insistence on rent control is a dangerous illusion that completely ignores decades of economic data.

As the historic collapses in St. Paul, Montgomery County, and Portland demonstrate, telling builders they cannot cover their future costs is the fastest way to stop them from building altogether. Rent control does not create a single new apartment; it chokes off supply, destroys union construction jobs, turns existing buildings into decaying liabilities, and forces everyday homeowners to subsidize the commercial real estate market through higher property taxes.

True public policy wisdom lies in building our way out of scarcity. Affordability is achieved by slashing restrictive municipal zoning codes, eliminating mandatory parking minimums, streamlining the bureaucratic permitting process, and encouraging an absolute flood of new housing supply. True progress means making it easier to build, not turning our city into an avoidance zone for the capital that keeps us moving forward. In our next column, we will take this same realistic look at another core pillar of the platform.

• Democratic Socialists of America Platform: Twin Cities DSA. (2024). Twin Cities DSA Party Platform. Retrieved from the Minneapolis Times Archive.

• Primary Source: The St. Paul Rent Control Experiment: University of Southern California Lusk Center for Real Estate & MassLandlords Policy Research. (2022/2024). St. Paul, Minn. Tried Rent Control: Here’s What Happened. Actuarial analysis of the 2021 voter-led ordinance, the subsequent 80% multi-family permit drop, and the 2022 city council legislative rollback. Can be evaluated through the MassLandlords Policy Research Database.

• Montgomery County Multi-Family Permitting Data: Montgomery County Department of Permitting Services. (2024/2026). The Impact of Rent Stabilization Acts on Multi-Family Residential Permitting Volume. Tracking the 97% multi-family residential building permit contraction following the July 2024 local stabilization mandates. Available via the Montgomery County Department of Permitting Services Legislative Archive.

• Portland Housing Production and Permitting Analysis: City of Portland Bureau of Development Services & KATU News Investigation. (2026). State and Local Leaders Confront Historic Ten-Year Low in Residential Housing Production. Data tracing the 70% collapse from $1 billion down to $300 million in permitted capital investments inside Portland can be reviewed via the KATU Portland News Investigation Vault.

• Oregon Rent Control and Real Estate Market Metrics: ECONorthwest & NAIOP. (2025). Bringing Portland Back From the Brink: The Compounding Cost of Regulatory Accumulation. Actuarial analysis of Oregon Senate Bill 608 on long-term housing supply shifts, investment avoidance parameters, and construction valuation trends. Available through the NAIOP Commercial Real Estate Development Association Library.

• Small Business Operational Cost and Insurance Spikes: NetSuite Small Business Financial Benchmarks. (2026). The Inflationary Crunch on Multi-Family Operations: Insurance and Utilities. Tracking the 8% to 12% operational cost spikes facing real estate operators can be reviewed via NetSuite Financial Benchmarking.

• Minneapolis Municipal Budget and Assessment Guidelines: City of Minneapolis. (2026). Approved Unified City Budget and Assessor Capitalization Valuation Frameworks. Detail regarding city property tax levies can be verified through the City of Minneapolis Budget Portal.

  Source: https://minneapolistimes.com/unpacking-the-dsa-part-8-rent-control-and-the-ruin-of-the-housing-market/

  Author: David Tinjum