The new rent control measure approved by voters in St. Paul will be interesting to watch. I have a working theory of rents and prices since 2007, and St. Paul may be a good test for it. In my graphic above, before 2007, there was a home building boom. Prices were high enough to induce building, and construction was somewhat active (Housing Expansion). After 2007, lending standards were sharply shifted from previous norms. Initially, this pushed down prices in credit constrained markets, ones where potential buyers can’t borrow under current standards. It didn’t push down rents, though, because the underlying demand for shelter hadn’t diminished, only the ability to buy homes had. That means that price/rent ratios declined (Housing Bust).