Untold Threat: Rent Control Ballot Question Will Imperil Municipal Budgets New Research shows rent control would erase $300 billion in home and property values, eroding local tax bases and risking deep local cuts. Tufts University Jonathan M. Tisch College of Civic Life, The Center for State Policy Analysis The Greater Boston Real Estate Board Key Takeaways Cities and towns are facing a significant untold threat to their bottom lines and the vital public services they provide if the proposed rent control ballot question is approved by voters this fall. Municipal budgets depend overwhelmingly on local property taxes to fund our public schools, keep our streets safe and our parks clean. City and town budgets are facing a generational threat if this ballot question passes. To understand the full extent of this fiscal tsunami, the Greater Boston Real Estate Board partnered with the Center for State Policy Analysis at Tufts on a comprehensive model that maps the state and local impact of rent control. Specifically, our findings show: - Almost immediately, the 2026 rent control ballot question would upend the real estate market, shrinking the residential property tax base by 6-9 percent in municipalities all across the Commonwealth. - Losses would mount over time. After a decade, property values would decrease by nearly 14 percent — costing home- and property-owners roughly $300 billion. - Faced with fast-eroding tax bases, cities and towns will have to choose between deep cuts to services or tax hikes of at least 10 percent to compensate for the losses. - Every city and town would face substantial property tax losses, but the hit to urban areas and college towns would be especially acute, with projected declines of 15-20 percent. - In Boston, proposed rent control rules would exacerbate existing fiscal challenges due to slowing residential tax collections and the ongoing commercial tax shortfall. - The effects of rent control would be permanent, amounting to a sustained loss of investment for homeowners and a durably shrunken tax base for cities and towns. What follows is a fuller exploration of these impacts, including background on the ballot question, a summary of short and long-term impacts, and case studies of the most severely affected towns and regions. Understanding Rent Control The proposed 2026 rent control ballot question would mandate the strictest statewide rent control policy in the United States, and arguably the tightest rent control in any city, county, or state around the country. Among its key features: It caps rent increases at the level of inflation (or lower when inflation exceeds 5%.) It applies to all cities and towns around the Commonwealth, with no opportunity to opt out. Roughly 70 percent of all rental units would be included in the new rules. Exemptions are very limited. Market-rate rent in apartment buildings of 4 units or fewer is only applicable to owner-occupied buildings. Where other rent control systems loosen over time, by permanently exempting all new construction or allowing market rents for vacant units, the ballot question lacks such release valves. Assessing the Ballot Question’s Impact While the scope of the 2026 ballot question is uniquely far-reaching, our findings show the potential impact by looking at similar rent control policies in the United States. In particular, we analyzed two high-quality rent control studies. An examination of the short-term impact of a strict rent control policy introduced in St. Paul, Minnesota in 2021. That policy included a fixed 3 percent rent cap and limited exceptions. An analysis of the long-term effects of rent control in Cambridge, Massachusetts, which uncovers the dampening effects of rent limits by analyzing price and investment changes after rent control ended in 1995. Together, these studies allow us to assess both the short- and long-term impacts of strict rent control approaches. And the fact that they reach similar findings — despite differences in rent rules, historical context, and research methodologies — suggests that they provide a reasonable way to analyze the current ballot question. Rent Control Erodes the Tax Base Rent control has a range of well-studied consequences, including reductions in new construction and economic dynamism. From a municipal finance perspective, the key finding is that rent control reduces property values and shrinks the residential property tax base. Short-Term Impacts To understand why rent control reduces property values — and tax revenue — it helps to start by thinking about rental properties, where the effect is especially direct. The value of an apartment building depends on its ability to generate revenue for the owner. Any rule that limits revenue, like curbing a landlord's ability to charge appropriate rents, will make properties less valuable. Rent control isn’t just about apartment buildings. Home values are also affected and the most basic reason is that virtually every home in the state is a potential rental property. Right now, homeowners in Massachusetts can retire to Florida and rent out their Bay State abodes for a fee that covers mortgage and upkeep. But this will change under rent control, since it may be impossible to set the rent at a level that covers costs. Losing this option to move-and-rent will make homes all around the state less valuable. And falling home values will have all manner of second-order effects, including making it harder for homeowners to get home equity loans for property improvements or family needs. Looking across both homes and rental properties, we estimate that over $135 billion of value would quickly vanish from the Massachusetts real estate market if the statewide rent control ballot question passes. For cities and towns, this means a 7.5 percent short-term reduction in the residential property tax base and an equivalent 7.5 percent loss of residential property tax revenue. Urban areas, and places with more rental units, would face especially large losses — because the effect on rental property is much more direct. We estimate that the property values and tax collections in Massachusetts cities would fall by roughly 8.5 percent in the short-term, compared to 7.5 percent statewide. Long-Term Impacts Over time, the impact of rent control will steadily grow, as consequences spill from individual properties to whole neighborhoods. One issue is that landlords will have less revenue to invest in their properties and less reason to invest, since they can’t adjust the rent to reflect any new property improvements. Shrinking investment in maintenance and upgrades will cause buildings to fall into disarray, tainting the broader neighborhood, driving down property values across the area. And there’s another side to this shortfall in investment. It’s not just building owners cutting back; cities and towns may reduce public investment with falling tax receipts leading to reduced spending on public safety, schools, and other local amenities. We estimate that the long-term effect on municipal budgets is roughly twice as sharp as the initial, short-term hit. The proposed rent control policy would reduce property values and local tax bases by almost 19 percent in urban areas and nearly 14 percent statewide, ultimately subtracting $300 billion from home and building values across Massachusetts. Limited Municipal Options City and town budgets in Massachusetts are already close to the breaking point, with little ability to absorb an additional fiscal shock. A recent report from the Massachusetts Municipal Association and the Center for State Policy Analysis found that municipalities are dealing with a "perfect storm" of overlapping challenges. Flexible forms of state aid have fallen dramatically in recent years, just as elevated inflation and rising costs have made it more expensive to buy material for construction projects, hire workers, and generally cover the rising cost of providing public services. Introducing rent control would whip this storm into a hurricane, forcing cities and towns to likely choose between two perilous paths: 1) Accept a permanent decline in residential tax collections, compared to current expectations. In the early years, this would mean a 6-8 percent shortfall; eventually 8-18 percent (detailed projections for every municipality are available as an addendum to this report). 2) Raise tax rates to compensate for this shortfall while keeping within the rules of Proposition 2½. This would require a rate increase of 7-9 percent in the early years and 8-20 percent for the long term. Long-Term Tax Rate Impact by Municipality Type (2036) Geography: All % Increase: +10.2% Extra Tax on $750K Home: $922/year Geography: Urban % Increase: +19% Extra Tax on $750K Home: $1,510/year Geography: Suburban % Increase: +10.4% Extra Tax on $750K Home: $880/year Geography: Rural % Increase: +8.2% Extra Tax on $750K Home: $851/year Mapping the Impact of Strict Rent Control Before we look at the hardest-hit areas, it’s vital to understand that no corner of the state will be spared. Every city and town in Massachusetts would be affected by the imposition of rent control, including rural areas and leafy suburbs. For one thing, every municipality has single-family homes, which will lose value if owners can no longer viably rent them out. All towns also have rental properties, which will be affected more directly. In the typical Massachusetts suburb, 20 percent of properties are rental units. Rural and suburban areas are at a distinct disadvantage when it comes to absorbing the effects of rent control because they often do not to have a lot of commercial activity, and therefore not much in the way of commercial property tax collections, hotel taxes, or meals taxes. Instead, rural and suburban tax systems are especially reliant on residential property values. Therefore, when property values decline, as they would under rent control, smaller municipalities have nowhere else to turn. As the map above shows, every city and town is likely to face at least a 6 percent short-term decline in its residential tax bases. Some areas will be harder hit, including a cluster of municipalities pushing northeast from Boston, a range of gateway cities, and a corridor across Western Massachusetts. Massachusetts Hubs Boston’s Double Challenge Boston stands out from the rest of the state, not just because it is our largest and most dynamic city, but because it is already in the throes of a fiscal challenge set off by the collapsing value of downtown office buildings. Due to the rise of remote work, office buildings aren’t as desirable or profitable as they once were. And their falling value has upended the city’s tax system, cutting commercial collections by hundreds of millions of dollars. To date, the city has chosen to fill this fiscal hole by raising residential tax rates, from 1.09 percent in 2024 to 1.24 percent in 2026. Introducing rent control would exacerbate this already-serious challenge. In Boston, the average property owner can expect a reduction of around 9 percent over 3 years in their investment. This will result in a $160 million residential tax shortfall in 2029. Filling this residential shortfall while continuing to deal with the drop in office values and heeding state rules for allowable tax rates would require a 13 percent rate increase for residents and an 8 percent rate increase on businesses. Over just a few years, hikes of that magnitude could push more homeowners and businesses out of Boston, creating a dangerous mix of high vacancy rates and declining economic activity. Chelsea-Everett-Revere Few areas would be as roundly affected by strict rent control as the north-of-Boston triad comprising Chelsea, Everett, and Revere. The three economically and socially diverse communities have a significant number of apartments; roughly half of all units in Revere are rentals; in Everett and Chelsea, it's over 60 percent. Under the proposed rent control ballot question, the total value of all these rental units would quickly fall, reducing the residential tax base by at least 10 percent. A decline of that size and speed would significantly impact city budgets and therefore city services, from public safety to road repair, schools, parks and other expected city needs. Losses in property value would continue to expand over the long-term, driving values and tax receipts down by 15-27 percent over 10 years. And while the cities could potentially fill this hole by raising tax rates, it would require residents to pay increases of 18-37 percent. Everett is currently struggling to collect the limited amount of revenue allowed under Proposition 2 ½ , thanks to a combination of political and economic constraints. Due to this, it is reasonable to expect that higher tax rates would also pose a significant challenge. Gateway Cities Gateway cities around the state would face severe challenges under strict rent control policies, as rental units make up the majority of properties across Lawrence, Fall River, New Bedford, Holyoke, Worcester, Lowell, Quincy, and Springfield — with Lynn and Salem close behind. Under a statewide rent control system, the value of all these rental properties in all Gateway Cities would immediately plummet, eviscerating municipal tax bases. The typical gateway city would see its tax revenue fall by 8-9 percent in the short term. Then, as the impacts spread, so would the losses, amounting to an average decline of 17 percent in the local tax base. Adjusting to losses of this scale would create a unique set of challenges for Gateway cities, because they tend to rely on businesses for an outsized share of their tax revenue, setting a higher rate for commercial properties compared to residential. But the state limits this tax-shifting setup, and rent control could push Gateway cities against these statutory limits, forcing changes to commercial rates with unpredictable impacts on the local economy. Pioneer Valley Also hard hit by rent control are the cities, suburbs, and college towns that extend north from Springfield and up the Connecticut River to Amherst. There you find places with a significant amount of rental properties and vulnerable tax systems. In Springfield, half of all properties are rentals. If the ballot question passes, its property values and residential tax base would shrink by over 8 percent in the short term, and twice as much over the long term. Beyond Springfield, what’s distinct about this region is how it connects with the college towns to the north, including Northampton and Amherst. There you find a very different style of rental properties, designed for the needs of students. Yet the effects of rent control would be felt just as sharply. Long-term tax losses in Amherst and Sunderland match or exceed those in Springfield, with Greenfield and Northampton just behind. And while these college towns might seem better positioned to offset such losses with higher tax rates, they already have some of the highest residential rates in the Commonwealth. Greenfield has the 7th highest out of all 351 municipalities; Holyoke the 16th; Amherst the 19th. Conclusion The 2026 rent control ballot question would have a negative, dramatic and permanent impact on city and town budgets across Massachusetts. By reducing the value of both rental properties and homes, rent control would decimate the residential tax base, which is the largest source of funds for vital public services like police and fire protection, parks and recreational spaces, snow removal and road repair. No corner of the state would be immune, but the City of Boston, its nearest neighbors, Gateway cities, and part of the Pioneer Valley would experience the most dramatic and detrimental effects. Methodological Notes Details about municipal property values, tax rates, and levies are drawn from the Massachusetts Division of Local Services. Dollar values are adjusted for inflation using the Consumer Price Index, accessed through the St. Louis Federal Reserve's FRED platform and pegged to fiscal 2026. The division of municipalities into rural, suburban, and urban clusters follows a taxonomy developed by the Metropolitan Area Planning Council. Gateway city designations reflect the state's official list and represent a subset of urban municipalities. Short-term impacts are based on Ahern and Giacoletti's 2022 study of St. Paul's strict rent control policy, which imposed a fixed 3 percent cap with limited exceptions. Long-term impacts draw on Autor, Palmer, and Pathak's 2014 study of Cambridge, which captures changing property values and spillover effects after rent control ended in 1995. Tax rate increases reflect what would be required to offset lost property tax revenue, consistent with the rules of Proposition 2½. With the exception of our discussion of Boston, we do not model the interaction between residential and commercial taxes. Our spillover estimates apply dynamics derived from the specific experience of Cambridge, adjusted for the characteristics of other cities. However, we do not model how declining property values in one city might affect neighboring towns or how this might play out around state borders. There are good arguments in both directions, namely that the regional and border effects could intensify or ameliorate property losses. But there is no strict, statewide rent control system that can serve as an empirical base to test these effects.