Inclusionary Housing

This article presents an empirical analysis of the effects of inclusionary zoning policies on housing prices and starts in California during the years 1988–2005. The analysis compares cities with and without such policies and carefully controls for spatial and temporal conditions to isolate the effects of inclusionary zoning programs. The analysis found that inclusionary zoning policies measurably increased the price and decreased the size of single-family houses in cities that adopted them, and that those cities also experienced a marginally significant increase in multifamily housing starts. The results are fully consistent with economic theory and demonstrate that inclusionary zoning policies do not come without costs.