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Inclusionary Zoning Does Not Drive Up Housing Costs

New research shows that it doesn’t raise housing costs, but it doesn’t help very low-income families much, either.
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REUTERS/Shannon Stapleton

When it comes to producing housing for people who don’t happen to be rich, solutions are becoming increasingly difficult to come by. This burden has fallen mostly on the federal government. However, cities have lately been finding ways to get the private home-building sector involved—namely through inclusionary zoning (IZ) policies. Such policies require developers to set aside a certain percentage of units in their buildings for sale or rent at below-market rates. The point of these policies is usually either to increase the share of affordable housing or to break up the socioeconomic and/or racial segregation of a city.

Such policies often invite the ire of private housing developers, however, as seen in California, where the California Building Association has filed several lawsuits to stop inclusionary zoning around the state. The homebuilders believe that local government-imposed inclusionary zoning ordinances constitute an unlawful taking of private property. They also don’t believe that inclusionary zoning actually increases affordable housing. Instead, critics of the policy argue that such zoning actually constrains the housing supply, driving residential costs further up.