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AFFORDING HOUSING AND THE DUBIOUS PROMISE OF INCLUSIONARY ZONING
By Connor Harris, The Manhattan Institute
HIt doesn’t create much new housing and distorts the housing market, providing little if any help for low-income households. It’s no substitute for
raises doubts about the usefulness of IZ. It seldom creates much affordable housing: Even a report by IZ supporters notes that the average number of housing units created by these policies per year is only 27. Moreover, IZ programs might produce broader distortions in the housing market that reduce or even cancel out its benefits for low- income households.
Basic economic theory predicts that if IZ programs reduce developers’ revenue, then fewer housing projects can be built profitably, reducing market-rate housing supply and driving up overall market prices. Such consequences would harm lower-income households for two reasons: First, in most cities, even most low-income households still pay market rents. And second, even new “luxury” housing can provide increased housing opportunities for lower-income residents: When affluent households move into better apartments, their old apartments are left open for other, less wealthy households to move into. Some recent research suggests that two new market-rate housing units could create about as much housing opportunity for low-income households as one dedicated affordable unit, and it’s quite possible that IZ policies reduce market-rate construction by much more than two units per one affordable unit created.
broad liberalization of zoning policies.
undreds of cities around the United States have adopted “inclusionary zoning” (IZ) policies in an effort to meet their communities’ need for affordable housing. Inclusionary zoning can encourage residential developers to rent a portion of their new
housing units at below-market rates by providing incentives such as looser zoning-code restrictions. In some cases, inclusionary zoning simply mandates a below-market quota for new apartment buildings above a certain size.
The appeal of inclusionary zoning to politicians is obvious: By enacting IZ policies, they can be seen to be doing something about housing crises without directly spending money from the municipal budget. Instead, the expenses of affordable housing are borne by developers — never a popular constituency and one that frequently gets blamed for causing gentrification.
But a look at the evidence and economic theory
AMM2 APARTMENT MANAGEMENT MAGAZINE - DECEMBER 2021 19