The rental housing market is one of the most important sectors in the economy. In 2019, renters occupied 44 million of the 123 million housing units in the United States, representing 36 percent of the total. The median renter spent 35 percent of their income on rent, while 22 percent of renters spent more than 50 percent of their income on rent. Furthermore, rents have been increasing at a record pace over the past decade, accelerating particularly after the pandemic. By March 2022, single-family rents had increased by 13.6 percent year-over-year, marking the fastest rise in nearly two decades.

In response to surging rents, cities across the country have enacted a series of new rent control laws, even in places with no prior history of rent control, such as Maine and Minnesota. For the first time in 70 years, California and Oregon enacted statewide rent control, and similar laws are being considered in Illinois, Massachusetts, and New York. In addition, rent control laws are becoming stricter, with some capping rent increases below the inflation rate.

Our research examines the effects of a rent control ballot measure passed in Saint Paul, Minnesota, in November 2021, on property values. We used detailed data from nearly 170,000 real estate transactions conducted between January 2018 and July 2022, including sales of single-family, owner-occupied houses, duplexes, triplexes, and large apartment buildings. Although existing research examines the effects of rent control on rent levels, evidence regarding its effects on property values is limited. However, studying changes in property values is useful because they reflect anticipated rent changes and expected responses from both renters and owners. Furthermore, only property values can provide evidence on the spillover effects of rent control on owner-occupied properties.

Our findings reveal that introducing rent control in Saint Paul reduced real estate values by 4.0–5.5 percent nine months after the measure passed, relative to properties in the five counties surrounding Saint Paul (excluding Minneapolis). Moreover, rent control decreased property values in Saint Paul by 6.8 percent relative to nine comparable Midwestern cities. Rental property values fell an additional 7–9 percent compared with similar owner-occupied properties, and apartment buildings with at least eight units lost 13.7 percent in value. These findings indicate large direct effects: The law decreased rental property values by reducing expected future rental income and landlords’ incentives to invest in maintenance. These direct effects also reduced the value of owner-occupied properties because a small share of owner-occupied properties converts to rental properties each year. However, two-thirds of the decline in the value of owner-occupied properties stemmed from indirect effects, which could include decreased neighborhood quality and greater strain on public finances due to lower property tax revenue.

Census data reveal that the effects of Saint Paul’s rent control law varied significantly by the income levels of renters, landlords, and owner-occupants. On average, rent control generated financial gains for renters and losses for owners, as expected. However, higher-income renters gained more than lower-income renters. Assuming that reductions in property prices reflect lower expected future rents, renters with incomes less than $22,500 received rent savings of 3.4 percent of property value ($5,800), while renters with incomes between $47,500 and $90,000 received rent savings of 9.4 percent of property value ($14,822). This disparity occurred because properties in higher-income areas, with their higher expected rent growth, were more strongly affected by the uniform rent cap. In contrast, landlords lost 7.4 percent of their property value on average ($11,371), and this figure varied little with landlords’ incomes. Consequently, lower-income landlords lost more wealth relative to their income than higher-income landlords. Finally, owner-occupants, despite not directly participating in the rental market, bore the greatest share of the total losses, with those earning between $37,500 and $47,500 experiencing the largest burden.

Overall, our research shows that the benefits of Saint Paul’s rent control law are distributed regressively to renters, while the costs are distributed regressively to landlords. Rent control laws are typically justified as a means to reduce inequality for low-income renters; therefore, our findings will help policymakers assess the costs and benefits of these policies. For example, since higher-income properties across the country generally have higher expected rent growth, uniform rent caps would likely yield regressive benefits in other cities as well. Additionally, our findings highlight the need for future research on the politics of rent control. Although these laws have resurged in the past decade, our evidence suggests they are a poorly targeted method to support low-income renters. Therefore, it is important to understand who votes for rent control, how they perceive the policy’s benefits, and the actual size of the benefits they receive.

Note
This research brief is based on Kenneth R. Ahern and Marco Giacoletti, “The Redistribution of Housing Wealth Caused by Rent Control,” Journal of Urban Economics 152 (March 2026).