Minneapolis, MN: Rent Stability Study
Minneapolis, MN: Rent Stability Study
With rents rising and housing affordability worsening, especially for low-income and BIPOC residents, Minneapolis is considering enacting a rent stabilization policy to moderate increases. A new comprehensive study from the University of Minnesota's Center for Urban and Regional Affairs (CURA) examines rent regulation policies in other cities and models the potential impacts in Minneapolis.
Why it matters
Unaffordable housing negatively affects residents' economic stability, health, education, and well-being. As rents have outpaced income growth in Minneapolis, particularly for lower-income households, housing instability and homelessness have increased.
How it works
Rent stabilization programs limit allowable annual rent increases, often tying increases to inflation. Key policy choices include:
The rent cap formula (e.g. 75% of CPI, CPI, CPI+3%)
Exemptions for new construction or small landlords
Allowances for vacancy decontrol when tenants move out
Cost pass-throughs for maintenance/capital improvements
Administration, monitoring, and enforcement
Roughly 200 municipalities across CA, NY, NJ, MD, and DC currently have rent stabilization, with statewide policies in CA and OR.
Yes, but
NIMBYs, Landlords, and developers argue that stabilization reduces revenues available for property upkeep and new housing construction. However, the CURA study found limited evidence of these negative effects based on a review of policies in other cities. Most programs exempt new construction.
By the numbers
The CURA study, which analyzed Minneapolis rent trends from 2000-2019, found:
From 2006-2019, rents for the bottom income quartile rose 44% while incomes rose only 2.9%
BIPOC residents, especially Black households, faced worsening affordability while white households saw incomes rise faster than rents
Under hypothetical rent caps, most Minneapolis landlords would still achieve target investment returns of 7-10% per year
The study also found that a rent cap set at 75% of CPI or CPI would have a small but meaningful impact on moderating rent increases, while higher caps (CPI+3% or +7%) would only constrain the most aggressive increases.
The bottom line
With housing instability on the rise, rent stabilization offers one potential policy tool among many to keep Minneapolis rental housing affordable, though careful policy design is crucial. The CURA study provides city leaders and voters with an objective, evidence-based analysis of the potential impacts and tradeoffs of enacting rent regulation.