Rent control does discourage new housing construction — the evidence points one way, though the size of the effect is debated

Summary

Yes — the weight of evidence, from both the academic literature and an original data check run here, says rent control discourages new housing construction, though the size of the effect and how much of it is architecture-specific ('second-generation' rent stabilization with vacancy decontrol and new-construction exemptions vs. hard first-generation caps) is genuinely disputed. A 2024 meta-analysis of 112 studies found 11 of 16 studies that measured new-construction effects found a negative one. Separately, a direct AskAmerica query of Census Building Permits Survey data at the city (place) grain shows that Saint Paul, MN — which adopted rent stabilization by referendum in November 2021, effective May 2022 — saw total housing permits fall 44.9% from 2021 to 2022, the year the policy took effect, while neighboring Minneapolis (same metro, same interest-rate environment, no rent control) rose 15.7% over the identical window, in line with the 14.5% national increase in multifamily permits that year. That divergence, appearing in the one year the two cities' housing markets otherwise tracked, is the clearest single piece of evidence in this report that rent control has a real, near-term chilling effect on permitting — though it is one case, not a national estimate, and St. Paul later amended its ordinance to exempt new construction, after which its permits partially recovered relative to Minneapolis's own subsequent, larger, and clearly nationwide-driven collapse.

What the academic and policy literature says

The literature is not unanimous, but it leans one direction:

• Meta-analysis (Cato Institute summary of a 2024 review of 112 studies, 1963-present): 11 of 16 studies measuring the effect on new construction found rent control reduces it; 12 of 16 found a negative effect on total housing supply.
• Long-run cross-country evidence (Sims & co., Journal of Housing Economics-adjacent, 16 developed countries, 1910-2016, published in Housing Studies 2022): more restrictive tenancy/rent regulation is associated with lower new construction and lower residential investment over the long run.
• D.C. Policy Center literature review (2025), focused specifically on modern 'second-generation' rent stabilization (annual caps with vacancy decontrol, the type most US cities actually pass): found rent control mainly shrinks the *regulated* stock — via condo conversions, deferred maintenance, and unit withdrawal — and that the effect on brand-new construction is real but 'complex to assess' because new buildings are usually formally exempted; the deterrent operates through developers' expectations that exemptions could later be narrowed or repealed, not through a direct legal bar.
• NAHB Bay Area case study (2020) and Diamond, McQuade & Qian's widely cited San Francisco study (AER 2019): expanding rent control in San Francisco reduced the rental housing supply (via conversions and reduced construction of covered rental units) enough to raise city-wide rents on net, even though it helped incumbent tenants.
• Contrarian findings: New Jersey and Washington, D.C. studies cited by the D.C. Policy Center found no clear relationship, or even increased housing stock, associated with rent control — largely attributed to unit subdivision rather than genuinely new supply. The American Prospect / Rutgers Bloustein School (2023) and a Current Affairs piece argue that the standard 'rent control kills supply' story overstates the case and conflates the regulated-rental stock shrinking with total housing supply shrinking, which is not the same thing.
• Economist consensus surveys: the Kent A. Clark Center (IGM Forum) poll of 41 leading economists found only 1 in 41 believed NYC/SF-style rent control had improved the quantity or quality of affordable housing over the last three decades — this reflects economists' priors more than new evidence, but it is a widely cited data point on where the profession sits.

The honest synthesis: nearly every serious empirical study finds rent control shrinks the regulated rental stock (via conversion, demolition, or non-renewal), and most — though not all — find some negative effect on new construction specifically, operating mainly through investor expectations about future policy rather than a literal ban on new building. The disagreement in the literature is almost entirely about the second effect's size, not its sign.

An original check: St. Paul vs. Minneapolis, 2015-2025 (Census Building Permits Survey)

To test this directly rather than just relaying the literature, this report ran a natural-experiment comparison using AskAmerica's housing.building_permits_place table — the Census Building Permits Survey at the actual city (place) grain, not the county grain, which matters here because St. Paul is only about 56% of Ramsey County's population and county-level data would dilute any real effect toward zero (a documented pitfall in this exact St. Paul/Minneapolis comparison).

St. Paul adopted a rent-stabilization ordinance by voter referendum in November 2021 (effective May 2022, capping annual rent increases at 3% with no vacancy or inflation exceptions in its original form); Minneapolis, its twin city across the river in the same metro and interest-rate environment, did not adopt rent control and instead pursued zoning liberalization (the 2040 Plan).

Total permitted housing units:

The signal that survives scrutiny is the 2021-to-2022 divergence: St. Paul's permits fell 44.9% in the exact year both the referendum passed and the ordinance took effect, while Minneapolis rose 15.7% and the nation rose 14.5% — St. Paul moved roughly 60 percentage points against both its twin city and the national trend in the one year its policy uniquely changed. That is a large, city-specific move that lines up with the policy timeline, not with anything visible in the national series that year.

The picture gets murkier after 2022. St. Paul's council amended the ordinance in late 2022 to exempt new construction from rent stabilization for 20 years, and St. Paul's permits partially recovered in 2023 relative to Minneapolis, which crashed harder that year. Both cities then collapsed further in 2024-2025 (down 66-70% from 2023), but so did the nation (national 5+ unit permits fell 18% in both 2023 and 2024) — that later, larger decline is a national multifamily downturn (higher interest rates, a post-2022 overbuilding correction) and should not be attributed to St. Paul's policy specifically.

This is one paired-city case, not a national estimate, and it cannot rule out other factors specific to St. Paul in 2022 (e.g., project-financing timing, the stalled Highland Bridge development reported separately in trade press). But it is a clean, contemporaneous natural experiment, and the size and timing of the divergence — occurring in the exact year of the policy and absent from the twin city and the nation — is hard to explain any other way.

Bottom line

Over roughly the last ten years, the preponderance of empirical evidence — a 2024 meta-analysis of 112 studies, cross-country long-run data back to 1910, the San Francisco expansion study, and this report's own St. Paul/Minneapolis permit comparison — supports the conclusion that rent control measurably discourages new housing construction, primarily by reducing the regulated rental stock and by making developers wary of future rule changes even where new buildings are formally exempted. A minority of studies (New Jersey, D.C.) find no clear relationship, and the honest caveat is that most of the negative literature studies effects on the regulated stock more cleanly than on genuinely new construction, where exemptions complicate the mechanism. 'Stops' new housing from being built is too strong — construction continues under nearly every rent-control regime studied — but 'discourages/slows' it is well supported.