A Tale Of Twin Cities

In recent years, Minneapolis enacted a set of reforms making it easier to build multifamily housing.  Tim Peach directed me to a blog post written by Matthew Maltman, which suggests the effects have been fairly dramatic:

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Scott Alexander recently suggested that building more housing might actually boost housing prices, by making cities more dense.  In a previous post, I used cross sectional evidence to cast doubt on that claim.  Maltman’s post provides time series evidence that rents in Minneapolis have risen by substantially less than in other midwestern cities:

(Click on image to enlarge)

Another graph shows declining homelessness in Minneapolis, at a time homelessness was rising in comparable cities.

In contrast, housing construction plunged soon after St. Paul voters enacted rent control in 2021:

When it comes to construction of duplexes, triplexes and other forms of multi-family housing, St. Paul’s building permits plummeted by 48% last year [2022] compared with the year before, according to HUD, the federal department of Housing and Urban Development.

Scott Alexander is correct that bigger cities are often more expensive.  (Not always; compare Houston and Austin.)  When a city grows rapidly because of a rapid increase in the number of people who wish to live there, housing costs often rise.  Austin is a good example.  But when the housing stock rises due to regulatory changes making it easier to build, housing prices tend to fall.

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