“Less than 24 hours after St. Paul voters approved one of the country's most stringent rent control policies, Nicolle Goodman's phone started to ring,” the Star-Tribune reports. “Developers were calling to tell the city's director of planning and economic development they were placing projects on hold, putting hundreds of new housing units at risk.”
The fact that rent control would backfire should just about be the most obvious thing in the world. St. Paul has tried to implement a rent control policy whereby rent can only increase a maximum of 3% per year. This policy would apply both to existing housing and new construction. Now that might sound reasonable but right now inflation is double that or more. This puts the development of new construction at serious risk. Developers have already pulled back and housing that was going to be built is no longer on the table. It is no longer affordable for them to build the housing or it makes that kind of investment too risky.
The only way to reduce the cost of housing without causing shortages is to build more housing. This is economics 101 and covers pretty much every good and service, not just housing. This policy causes just the opposite. Investment in new housing projects has all but dried up so if you are looking to rent or buy in St. Paul it will be even harder. Affordable housing is great but unless you are one of the three people to find something available, it's all just theory. If St. Paul (and other places implementing rent control) were serious about affordable housing, they would be doing everything in their power to ensure that more housing gets built and not implement policies that cause just the opposite.
The above article is a couple of years old now but not a whole lot as change. There have been a couple of modifications to the law the could make things slightly better (for instance, exempting structures that have been built in the last 20 years or will be built in the next 20 years). Still, that just seems like a stop gap solution to stem the bleeding in investment in new construction. It's not much of an improvement and rent control can only continue to cause additional shortages.