Minneapolis 2040 Results So Far: Rent Increases Down 17%–34% Through Zoning Reform and Incentives

By Eric Weld, MassLandlords, Inc.

Minneapolis, Minn., is one of a handful of U.S. cities that have addressed rising housing costs, successfully so far, by implementing pro-growth policies that incentivize new construction, mixed use and increased soft density without discouraging investment.

Since Minneapolis, Minn., viewed here approaching from the south, became the first U.S. city to eliminate single-family-only zoning as part of its Minneapolis 2040 plan, it has reduced home and rent price increases 17%–34%, according to an analysis by Middlebury College economists. (Image License: CC-BY SA Wikimedia Commons-AlexisHoratius)

Since it eliminated single-family-only zoning citywide in 2020, becoming the first U.S. city to do so, Minneapolis has achieved the intended slowdown in housing and rental price increases that the policy was designed to address.

While the successful slowdown in housing and rental prices comes with caveats, which we will look at, the city’s housing policies, and their efficacy, can be viewed in contrast to other states and communities attempting to achieve the same results through rent control.

We’ve analyzed several urban centers across the nation in recent months that are struggling with rent control and its damaging effects on housing, renters and local economies. We analyzed rent control policies and their results in St. Paul, Minn. (80% drop in housing permits), Montgomery County, Md. (90% drop in permits), and Portland, Maine (property value decreases and tax increases).

So far, thanks in large part to MassLandlords’ efforts, we have avoided a similar fate in Massachusetts. Meanwhile, we’ve touted alternative policies, like zoning reform and incentives, that can expand housing and create more affordable housing, thereby taming rising housing and rental costs, without harming rental business owners or renters. These are policies that Minneapolis and other cities have implemented with positive results.

With rent control shelved for the time being in Massachusetts, we will look into a few of these American communities, starting with Minneapolis, that have succeeded in reining in housing and rental prices in recent years without rent control.

Correcting Discriminatory Zoning Policies

In 2018, Minneapolis sought to devise housing policy for the city that would accrue benefits to all its residents as part of projected growth, as opposed to past practices that had excluded benefits to some through exclusionary zoning and other policies. The resultant plan, Minneapolis 2040, took effect on Jan. 1, 2020, following two years of public input and refinement.

As a hub of the Twin Cities region, Minneapolis is legally required to devise a comprehensive city plan for growth and development every 10 years, a tenet of the state’s Metropolitan Land Planning Act. Minneapolis 2040 was an update to Minneapolis 2030.  Housing is one of the main areas of focus in the city’s comprehensive plan.

A main component of Minneapolis 2040 is its section focusing on affordable and accessible housing, which carries the subtitle, “In 2040, all Minneapolis residents will be able to afford and access quality housing throughout the city.”

Like many other growing American cities, Minneapolis wrestles with housing shortages, declining percentages of affordable housing, and increases in the number of cost-burdened homeowners and, mostly, renters. The city recognized, as outlined in its Minneapolis 2040 report, that past zoning ordinances and deeds were racially biased, written to discourage and hinder financial support for people of color seeking to move into more exclusive white neighborhoods.

This is a zoning history shared by many cities throughout the U.S. One result of formerly discriminatory zoning laws has been a codification of disparities, as cities have grown, that has segregated urban populations, corralling low-income communities in less desirable areas with low public investment and less access to quality services, goods and housing.

While discriminatory language has been removed from many zoning laws, the socioeconomic disparities remain baked in. Whatever your ideology, the economics don’t lie: There’s a gap in wealth between white and Black Americans that was created, in part, by discriminatory zoning polices of the past that deterred Black populations in more affluent neighborhoods.

Think of some cities today in Massachusetts that retain single-family-only zoning laws with large lot size requirements, assuring that only residents at certain wealth levels can live in certain neighborhoods with good schools, roads, supermarkets, parks and trees – and strictly one house surrounded by lots of land.

As part of its Minneapolis 2040 plan, the city encourages mixed-use neighborhoods with denser housing like this one, built next to a multifamily building. The city’s elimination of single-family-only zoning also provides permission by right to build duplexes and triplexes in any residential zone citywide. (Image License: cc by 2.0 flickr-tela chhe)

Housing Diversity and Density

One of the hallmark changes in Minneapolis 2040 is a pioneering elimination of single-family-only zoning citywide. Minneapolis was the first U.S. city to make such a change, removing a policy that has been standard urban planning since the 1920s. A few other cities and states have followed or are in the process of weakening exclusionary single-family zoning, including Oregon, California and Washington.

Removing that land-use requirement included allowing the construction of duplexes and triplexes by right in all residential zones, introducing more density and increasing access to multifamily, affordable housing.

The plan also introduced a range of incentives to encourage affordable and multifamily housing development, such as tax reductions, design competitions, lower parking regulations and “density bonuses” for new construction.

Finally, the plan has encouraged diverse community growth through support of mixed housing types: prefabricated, 3D-printed and tiny homes, accessory dwelling units, duplexes and triplexes, condominiums, shared and co-housing, single room rentals and large family structures all within the same neighborhoods.

A Nationwide Housing Experiment

Fundamentally, the Minneapolis 2040 plan recognized that encouraging growth and housing development were essential to meeting the demands of housing and affordable housing for a fast-growing city. More housing supply maintains better price controls by instilling competition among housing providers.

While rent control is not mentioned anywhere across the city’s growth plan, Minneapolis residents in 2021 did approve, via referendum, an option for the city to enact rent control. Unlike its twin city, St. Paul, however, Minneapolis has so far not acted on that option.

It’s possible city planners adhered to countless data that proves rent control stifles housing development in communities that have imposed the policy, going back more than half a century. St. Paul, which lies across the Mississippi River from Minneapolis, has seen a devastating drop in housing permits since enacting its rent control policy in 2021. Lower housing stock inevitably drives up home and rental prices as the value of homes and apartments increases with their relative scarcity.

Nationwide, we are seeing in real time a sort of urban planning experiment with one group of cities (St. Paul, Portland, Maine, Montgomery County, Md., New York City) attempting to manage house and rent prices via rent control, and another group (Minneapolis, Phoenix, Houston, Seattle) attempting the same ends through pro-growth policies and natural market forces.

Can a city or state maintain robust housing development as a way to keep prices reasonable through zoning reform and financial incentives for affordable, mixed, multifamily, denser development without hammer policies like rent control? It’s a tack that we at MassLandlords have been advocating in Massachusetts for years in opposition to the state’s rent control proponents.

Slower Increases in Home Prices and Rents

So far, resultant data in Minneapolis is positive, but not entirely conclusive. The plan’s targets are stated in its title, after all. Its future-focused policies, with 2040 in mind, have been in place only six years.

To be sure, rent and house price increases have slowed since Minneapolis 2040 took effect. A five-year study of the city plan’s effects, by Middlebury College (Vermont) economists Helena Gu and David Munro, compared housing and rental prices in Minneapolis with a synthetic control scenario, a hypothetical Minneapolis that did not implement reform, using amalgamized data from 83 similar cities in the same time period.

“Using a synthetic control and difference-in-differences approach, we find robust evidence that the reform reduced the growth of housing costs over the subsequent five years,” write the economists.

Specifically, their study found that Minneapolis’ home price increases were 16% to 34% lower than projections if single-family-only zoning had been left in place. Rents were 17% to 34% lower.

However, they add, the slowdown in home prices and rents was accompanied by a simultaneous decrease in housing demand, which would possibly partly explain the ease in pricing. The analysis also does not conclude evidence of an increase in housing construction or supply as a result of the 2040 policies, though some incentives did trigger an increase in new affordable housing creation.

U.S. Census data supports the study’s findings. Minneapolis recorded a population of 430,324 residents in the 2025 census, a net growth of a negligible 324 residents since the 2020 census recorded 429,984 people living there.

To some opponents of Minneapolis 2040’s elimination of single-family-only zoning regulations, still-increasing house and rent prices are evidence that the plan’s reforms are not working. However, as the Middlebury College study details, price increases have slowed down in comparison to similar cities. That was one of the main intentions of its pro-growth policies, not an unrealistic freeze or reduction in house and rent prices. (The basic reality of inflation, and a federal reserve that, by express policy, aims to sustain low, positive inflation, means that prices will always go up.)

By constructing one of the nation’s most extensive urban bicycle lane and pedestrian networks, along with investments in public transit, Minneapolis aims to reduce automobile dependency and traffic, decrease parking space requirements and free more area for living space. (Image License: CC BY-SA Wikimedia Commons-Minneapolis Public Works TPP)

More Bike Lanes, Public Transit

Another important component of Minneapolis 2040 is its emphasis on expanding and improving public transit, investing in an extensive network of bicycle lanes spoking out to suburbs, and improving the pedestrian environment to accommodate more walking, all to reduce dependency on cars.

Partly as a result of its transportation investments, Minneapolis has been able to reduce parking regulations assigned to new housing, promoting more density and claiming more area for living space.

For a good analysis of Minneapolis’ smart transportation reforms, view this video by Ray Delahanty, also known as CityNerd, a former traffic engineer and urban planner who examines transportation and housing in cities.

A Model for Managing Housing Prices and Growth?

Minneapolis is only a few years into its 20-year planning era, but early indications are that the plan is having a positive effect on rents and housing. If it continues taming rent increases to the tune of 17%–34%, it may become a model for other communities seeking solutions to their housing and rent increases.

As the city’s growth picks up again, as expected, an accompanying increase in housing demand would help in drawing positive conclusions with certitude.

Still, one conclusion is obtainable now: The Minneapolis 2040 plan has not resulted in steep drops in housing development in the city. Development hasn’t exploded, as some hoped, but it remains steady.

That in itself is a stark and important distinction from cities that have imposed rent control and seen their housing development crater, property values decrease and taxes shoot up.