Findings in "Housing Supply And Affordability: Do Affordable Housing Mandates Work?"

Does Inclusionary Zoning Lead To More Affordable Housing? ---After passing an inclusionary zoning ordinance, the average city produces fewer than 15 affordable units per year.
---In the Bay Area, where inclusionary zoning has most prevalent, it will only produce 4 percent of the region's estimated affordable housing need, and it will take 100 years for inclusionary zoning to meet the current 5-year housing need.

What Effects Does Inclusionary Zoning Have on the Housing Market?
---Inclusionary zoning leads to fewer homes being built in a community;the average city produced 214 homes the year before inclusionary zoning but only 147 the year after. Thus, for example, the 45 Bay Area cities that have inclusionary zoning are losing a total of 2,300 new homes per year.
---Inclusionary zoning caused the price of new homes in the median city to increase by $22,000 to $44,000.

What Are the Fiscal Effects of Inclusionary Zoning?
---The cost of selling some new homes at below-market rates costs builders in the average city $45 million.
---By lowering the assessed value of homes and the resale value, inclusionary zoning leads to substantial loss of state and local tax revenue. For example, the total present value of lost state and local government revenue due to inclusionary zoning ordinances in the San Francisco Bay Area is upwards of $553 million.

How to Tackle Affordable Housing Problems.
---It is a fundamental law of economics that price controls cause shortages and Don't help increase supply.
---A recent Harvard study found that 90 percent of the difference between physical construction costs and the market price of new homes can be attributed to land use regulation.
---Most affordable housing is not new housing, but is older homes. The only way to increase the supply of affordable older homes is to reduce restrictions on new home building and increase the overall supply of homes.

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Dr. Adrian Moore, Vice President, Reason Foundation
Adrian.Moore@Reason.org