Will the inclusionary housing programs drive up the price of market housing?

This question has been carefully researched in the US. The empirical evidence there conclusively shows that there has been little to no impact on the price of housing in the municipalities that have adopted inclusionary zoning programs.

Most notably, there are two major studies, each one separately undertaken by a highly-regarded, non-partisan and university-based think tank.  Both looked at the impact of zoning programs on housing price and on production by statistically analyzing the actual results coming out of many municipalities over many of years.

Both of these studies separately came to the same conclusion noted above: namely, that inclusionary zoning has had no impact of any significance on the price of housing. While it is true that municipalities with inclusionary zoning saw very substantial price rises over the study periods, it is also true that these price rises were nearly the same as those in municipalities without inclusionary zoning.

This conclusion may for some seem to defy common sense, but it is entirely credible and understandable. There is no doubt that the affordable housing obligation in these programs creates a cost burden for the developers, and they dearly would like to pass on this cost through higher prices. But they can’t, and they can’t because they are already more than likely charging the maximum price that the market can bear.

So, if they can’t increase house prices, how do developers deal with this cost burden? This depends upon the circumstances. When not given sufficient notice of this additional imposition, it is likely to come out of their profits, just like any other unexpected cost increase. But, when the imposition is clear and known well in advance, the cost burden is likely to be absorbed by them paying less for the land.

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