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"AFFORDABLE-HOUSING" LAWS MAKE HOUSING MORE EXPENSIVE

(from The Lighthouse)

Can housing be made more affordable by requiring

developers to set aside a portion of their new

homes for purchase at below-market rates?

Advocates of affordable-housing mandates --

a.k.a., inclusionary zoning -- say that

affordable housing can be built as easily as

signing a government edict. But according to

economists Edward Stringham and Benjamn Powell,

director of the Center on Innovation and

Entrepreneurship at the Independent Institute,

inclusionary zoning in California has had

precisely the opposite effect: it has resulted in

fewer homes being built and higher prices for the

vast majority of homebuyers.

"In the median city in the San Francisco Bay

Area, builders must forgo $345,000 in revenue for

each below-market unit," Stringham and Powell

write in a recent op-ed. Consequently, builders

have built fewer houses and have charged more for

the market-rate homes -- about $44,000 more for a

house in the median Bay Area city and more than

$100,000 more in higher-end communities.

Not only does inclusive zoning act as a hefty

hidden tax, it actively discourages the

construction of affordable housing: "The average

[Bay Area] city has produced fewer than 15

affordable units per year since passing an

inclusionary ordinance," Stringham and Powell

write. "If inclusionary zoning continues at its

current pace, it will take 100 years for

inclusionary zoning to meet the region's current

five-year housing need."

See "Inclusionary Zoning Makes Housing Less

Affordable," by Edward Stringham and Benjamin

Powell" (11/1/04)

http://www.independent.org/newsroom/article.asp?id=1416

Also see, "San Jose Should Abolish Its Housing

Affordability Requirements," by Benjamin Powell

(SILICON VALLEY BIZ INK, 10/1/04)

http://www.independent.org/newsroom/article.asp?id=1376

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THE LIGHTHOUSE

ISSN 1526-173X

Copyright © 2004 The Independent Institute

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