Inclusionary Housing Doesn't Work

The trend toward local government requirements to mix lower-income housing with higher-priced homes will backfire and reduce total housing, further driving up costs, according to an economist for the housing industry who spoke at the Southeast Building Conference in Orlando on August 4th. The government mandate known as 'inclusionary housing', said Elliot Eisenberg "sounds like a wonderful silver bullet, but it's just a plain bad idea."

Eisenberg said the concept is similar to rent control and other government efforts to intervene in markets with laudable goals, but negative "unintended consequences." In the case of inclusionary zoning, he said, builders charge more for market housing to make up for lower margins on subsidized units, driving up overall prices. Builders also tend to move to areas where there are no inclusionary zoning requirements, reducing the net supply in some areas.

Eisenberg and others at the conference said government can lower the cost of housing by allowing zoning flexibility, expediting reviews, waiving impact fees and relaxing design standards. "We've really got to go to higher densities, that's No. 1," said Carl Ludecke, a longtime Mount Dora home builder. But local officials are pressured by not-in-my-backyard sydrome, he said.