In terms of housing issues, the primary public policy focus of economists has been the affordability of homes, mortgage availability, land-use regulation, and rent control. Studies of land-use regulation focus on the effects of regulation on the price of owner-occupied housing. Work on low-income housing has concerned itself more with issues of measurement and the debate over supply-side versus demand-side subsidies. In this paper, we look at the relationship between these two issues to examine how government regulation affects the dynamics of the low-income housing stock. We find that consistent with theoretical models of housing, restrictions on the supply of new units lower the supply of affordable units. This occurs because increases in the demand for higher quality units raise the returns to maintenance, repairs, and renovations of lower quality units, as landlords have a stronger incentive to upgrade them to a higher quality, higher return housing submarket. This result is disturbing because it highlights how policies targeted toward new, higher-income owner-occupied suburban housing can have unintended negative consequences for lower-income renters. Our research differs from most studies on affordable housing in that we are not concerned with identifying the size of the affordable stock or matching it to the number of low-income households. The gap between the housing needs of low-income households and the stock of units deemed affordable has been demonstrated in a considerable amount of other research.