The Redistribution of Housing Wealth Caused by Rent Control

Abstract

This paper studies the effects of rent control on the housing wealth of renters, landlords, and homeowners. 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%. Leveraging administrative parcel-level data, we show that upper-income renters gained more than lower-income renters. In contrast, small landlords lost the same as large landlords. Owner-occupants' wealth also fell significantly, due to both direct capitalization effects and negative externalities. These results provide the first evidence on the heterogeneous wealth effects of a wave of new rent control laws.

Keywords: Rent control, real estate valuation, wealth transfers, externalities

JEL Classification: D61, D62, G51, H23, R23, R31, R32, R38