Do Affordable Housing Mandates Work?

A new Reason study finds that affordable housing ordinances in Southern California have actually caused prices to rise by as much as $100,000.
June 11, 2004, 9am PDT | Chris Steins | @urbaninsight
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A new Reason study by Benjamin Powell and Edward Stringham, both San Jose State University economics professors, finds that affordable housing ordinances in Southern California have actually caused prices to rise by as much as $100,000 and have triggered dramatic decreases in new home construction, further escalating Southern California's housing crisis: "Inclusionary zoning has failed to produce a significant number of affordable homes due to the incentivescreated by the price controls. Even the few inclusionary zoning units produced have cost builders,homeowners, and governments greatly. By restricting the supply of new homes and driving up the price ofboth newly constructed market-rate homes and the existing stock of homes, inclusionary zoning makeshousing less affordable.Inclusionary zoning ordinances will continue to make housing less affordable by restricting the supply ofnew homes. If more affordable housing is the goal, governments should pursue policies that encourage theproduction of new housing. Ending the price controls of inclusionary zoning would be a good start." [Editor's note: The link below is to a 1MB PDF.]

Thanks to Chris Steins

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Published on Friday, June 11, 2004 in Reason Public Policy Institute
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