[vlovich123]

> Over the nine months following the passage of rent control in St. Paul, Minnesota in 2021, average property values fell by 4.4% to 5.8%

This to me is the big one. So in addition to rents being more affordable (even if wealthier renters capture most of the gains) limiting the rental market profits also makes houses more affordable to buy? The paper is trying to argue this is bad, but I’m not seeing it.

It’s almost like “rent-seeking behavior” is a negative pejorative of an actor’s actions that negatively influence the market.

[verteu]

Counterintuitively, collecting rent is not considered "rent-seeking" by the econ definition, eg: https://www.investopedia.com/terms/r/rentseeking.asp

[dmurvihill]

Collecting rent maps exactly to that definition.

[verteu]

It does not, as explained in the section "Are Landlords Rent Seekers?"

"Rent seeking" is more about making money by changing the rules instead of providing a service.

[vlovich123]

No, if you charge rent but aren’t actually investing meaningful capital in the property (most apartment building landlords do not in my experience), then that meets the definition of rent seeking.

From Wikipedia:

> Rent seeking, according to the Georgist, does not include those persons who have invested substantial capital improvements in a piece of land, but rather those who perform their role as mere titleholders.

[scelerat]

I'm not picking up any subjective, simplistic labeling like "good" or "bad." Are we reading the same paper?

Haven't fully read the paper, just the introduction and skimmed through the rest, but it seems they're merely observing that a rent control law went into effect, and given some control variables, it seems like it depressed property values.

Their findings also suggest that while the wealth transfer of rent control factor is real -- that is, landlords are impacted more and existing renters see relative benefit -- that effect is greater among higher-income renters and less among lower income renters.

Second paragraph in the Conclusion:

"While the negative wealth effects for owners are large, our results show the positive effects of the law are poorly targeted. Though the intention is to benefit lower income renters, we find that the largest benefits are received in the neighborhoods of the city in which renters have higher incomes, are less likely to be minorities, and have more education. To the extent that price drops for rental properties reflect future rent savings, and thus housing wealth gains for tenants, our results suggest that the largest cost savings are going to be realized in the neighborhoods with the richest, most educated, and least diverse owners."

[SpicyLemonZest]

Where in the paper do the authors try to argue that this is bad?

[hollerith]

It's worrying because it reduces the incentive to build more housing.

[vlovich123]

Generally reduced construction results in higher real estate prices not lower prices. Proof: look at the well studied example of California.

[theendisney]

You can also accomplish lower prices by building more. People dont want that so one could argue it is good to make them pay for what they want.

[dreambuffer]

How do you quantify "incentive"? Is a landlord really looking at 5% lower property value and deciding it's not worth investing? Is this even true in aggregate?

[PaulHoule]

It is a major paradigm in economics that if you change this by X% it will change something else by Y% and to estimate that ratio. It may be that people don’t really think that way: economic growth seems to be continuous and exponential in character whereas economic dislocations are discontinuous in character.

I think of how I was absolutely shocked when a Big Mac meal was $10 during the pandemic (I think it cost about $2.50 the first time I bought it) and didn’t think I was going to buy 4% less of it but rather I skipped the fries.

[hollerith]

Well, there's 2 ways to become a landlord: to buy a house or to build a house. I was focused only on the second way.

The cost of the wood and the labor needed to build the house is unaffected by the rent control, so if cost remains the same, but the reward (or "revenue") from building the house decrease from $100K to $95K, then fewer houses will get built.

[dreambuffer]

Yeah, sure, but only like, 10-100 fewer housing units per 100k people.

[Nursie]

IFF there isn’t already excess demand for building in the market, and house-building is itself ‘liquid’, something that’s not necessarily true.

When supply is constrained by the availability of builders and materials, then some landlords dropping out won’t make a lot of difference there.

[SpicyLemonZest]

Yes. Since the source paper was written, St. Paul has realized that this is the case and rolled back rent control on new construction to hopefully solve the problem. (https://minnesotareformer.com/2025/05/08/st-paul-walks-back-...)

[dreambuffer]

So they're losing out on a few dozen new units, but it is made up for by renters across the board having to pay less rent and thus having more money to put into the economy? Seems like a good trade to me?

[mgh95]

Because then the units fall into disrepair (because they no longer make sense to maintain) leading to less supply leading to lower availability of units leading to higher cost of housing.

See what happened in NYC regarding the consolidation of housing units.