Like too many popular discussions of public policy, the debate about rent stabilization is commonly driven by fear and half-truths more than by reasoned assessments of the evidence. Such is the case in conversations across the country, and now in the Twin Cities ("Let's not relive the rent control nightmare others endured," Opinion Exchange, Oct. 5).
But rent stabilization is too important a question to be left to heated rhetoric; it deserves a clear-headed — and calm — civic conversation.
As researchers, we try to look at the actual data rather than exaggerated narratives. In our reports on the rent stabilization topic, we find little support for the disaster narratives of housing shortfalls predicted by simplified economic theory and the opponents of rent stabilization. We do find significant evidence of the social benefits of residential stability brought by constraining rent increases, with minor issues that proponents also need to address.
Our research draws from studies of rent stabilization in places ranging from Cambridge, Mass., to San Francisco, Calif., to a variety of cities in New Jersey. On balance, such ordinances do little harm. Moreover, companion regulations can address unintended consequences that do sometimes emerge, such as reduced cosmetic maintenance by landlords and owners withdrawing their units from the rental market through condo conversion or demolition.
In general, there is little to mixed evidence that rent stabilization deflates property values, reduces the rate of new housing construction or has detrimental impacts on "mom-and-pop" landlords.
Some might argue that the proposed ordinance being debated in St. Paul is different because it would also apply to new apartment buildings. This is a departure from many other ordinances and the proposed rent stabilization measure will hold the earnings and profit trajectories to specified levels.
But investors buy into financial instruments with fixed returns all the time, including Treasury bills, municipal bonds and the like; such financial modeling is nothing new to savvy investors.
It's also unclear how tightly future constraints would bind. In our Minneapolis Rent Stabilization Study, we found that if there had been such an ordinance, there would have actually been little impact, except on the most egregious side of the rental market; basically it would have constrained only the most extreme rent increases which were never more than a small portion of the market.
It is useful, too, for the regional discussion of rent stabilization to include the potential benefits, which are often ignored or under appreciated. For example, in our research, we found that the greatest beneficiaries from rent stabilization in Minneapolis would have been the lowest-income renters and renters of color — especially Black renters.
This is a finding of some significance given the region's extreme racial disparities in well-being: In our work with PolicyLink, we found that the Minneapolis metro is among the most prosperous of America's top 150 metropolitan regions (ranked six out of 150), but also has higher racial disparities than 148 other metro areas.
Also underappreciated is the value of residential stability. In our research, Rent Matters, we found that displacement is damaging to renters. Moving for financial reasons causes poor health, anxiety and even depression with stronger impacts on women. Given the barriers that women of color face for economic self-determination, this means that women of color are most deeply impacted by forced moves. Children's learning and social support is also impacted, with long-lasting impacts on their well-being.
It's also the case that money spent on rent doesn't always help support local business. The National Equity Atlas, a project of PolicyLink and one of our research centers, shows that if St. Paul renters were not burdened — if they were only paying 30% or less of their gross income on rent — that their collective spending power would increase by $142 million. The comparable figure for Minneapolis is $248 million. They could invest in themselves, their children and their hometowns. Who doesn't want to live in that place?
Our main message: Take a breath, calm down, and have a level-headed civic discussion based on the evidence. If the cities want to head in a new direction that values residential stability and centers racial equity, this ordinance is worthy of thoughtful debate and careful consideration.
Edward G. Goetz is professor and director, Center for Urban and Regional Affairs, University of Minnesota. Manuel Pastor is professor and director, Equity Research Institute, University of Southern California.