Housing Supply and Affordability: Do Affordable Housing Mandates Work
The efficacy of affordable housing mandates, particularly inclusionary zoning, has been a subject of significant debate among policymakers, economists, and urban planners. These mandates typically require developers to include a certain percentage of affordable units in new housing projects or to contribute to an affordable housing fund. This analysis explores the impact of such mandates on housing supply and affordability, drawing from various studies and reports.
Overview of Inclusionary Zoning
Inclusionary zoning is designed to address the growing demand for affordable housing in urban areas by integrating affordable units into market-rate developments. However, the empirical evidence suggests that these mandates often fail to deliver the intended outcomes. For instance, a study examining inclusionary zoning in Los Angeles and Orange Counties found that only 6,379 affordable units were produced across 13 cities with such mandates since their implementation. This translates to an average of less than eight units per city per year, which is insufficient to meet local housing needs.
Economic Implications of Mandates
The economic theory behind inclusionary zoning posits that these mandates function similarly to a tax on development. As developers are required to allocate a portion of their projects to affordable housing, the costs associated with compliance can lead to higher prices for market-rate units. Research indicates that cities imposing below-market housing mandates experience 10% fewer homes and 20% higher prices overall.
This paradox suggests that rather than alleviating affordability issues, inclusionary zoning may exacerbate them by reducing the overall supply of new housing.
Case Studies: Seattle and the San Francisco Bay Area
The impact of affordability mandates has been observed in various regions. In Seattle, the Mandatory Housing Affordability (MHA) program aimed to increase affordable housing through density bonuses while requiring contributions from developers. However, findings revealed that while there was no overall decline in housing supply citywide, there was a significant drop in permits issued within MHA zones. Developers tended to avoid these areas due to the costs imposed by affordability requirements, opting instead for nearby blocks not subject to such mandates.
.Similarly, in the San Francisco Bay Area, inclusionary zoning ordinances produced few affordable units and contributed to rising prices for market-rate homes. The study concluded that these policies not only failed to meet housing needs but also led to a decrease in new construction overall.
Alternatives to Mandates
Given the challenges associated with inclusionary zoning, some experts advocate for alternative approaches that may be more effective in increasing affordable housing supply. Incentive-based programs—such as tax credits or subsidies—have shown promise in creating more affordable units without imposing burdensome costs on developers. A report highlighted that incentive programs tend to yield better results in terms of both the number of units created and their affordability compared to strict mandates.
Conclusion
The evidence suggests that while affordable housing mandates like inclusionary zoning are well-intentioned, they often fall short of their goals. They can inadvertently lead to reduced housing supply and increased prices, ultimately harming those they aim to help. Policymakers should consider alternative strategies that incentivize rather than mandate affordable housing production. By focusing on flexible solutions that encourage development while addressing affordability concerns, cities can better meet the diverse needs of their populations and foster more inclusive communities.
Further reading:
[PDF] DO AFFORDABLE HOUSING MANDATES WORK? EVIDENCE … policyarchive
Getting By on Reduced Supply: The Impact of Affordability Mandates cayimby