How Inclusionary Housing Policies Impact Local Economies

For many Americans, owning or renting a home has become increasingly, and sometimes prohibitively, expensive, particularly in hot real estate markets. Many cities have responded by implementing inclusionary housing policies that require developers to build a certain percentage of units on site as affordable for working families. Research shows that inclusionary housing policies promote overall affordability in housing markets by keeping prices low for everyone, not just those in the affordable units.

Promoting Affordability

Many policymakers have concerns that inclusionary housing policies would impose additional costs on developers, and that these costs could be passed along to renters and buyers or they could discourage housing development. Fortunately, research illustrates the opposite. Studies by economists and policy researchers show that inclusionary housing policies are not associated with reductions in the rate of housing development among cities that implement them, nor are they associated with substantial increases in housing prices. Rather, inclusionary housing policies foster affordability at all levels.

Resources

These resources aim to help policymakers, advocates, and other stakeholders in cities that are interested in pursuing an inclusionary housing policy, but may be unsure of its economic feasibility or tradeoffs. To that end, we provide resources on the economics of inclusionary housing. The resources included here answer these questions:

  • Will inclusionary housing stymie development?
  • How would inclusionary housing affect land values?
  • Should my city complete a feasibility study?
  • What are the best practices for completing a feasibility or nexus study?
  • Will inclusionary housing impact the rate of development?
  • What is the impact on overall housing affordability?
  • How does it impact the price of new market-rate units?
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