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New Study Finds Inclusionary Zoning's Effects Vary by Area
By Amilda Dymi
WASHINGTON-It seems there is a competition between studies aiming to discover if and how much inclusionary zoning policies affect home prices and affordable housing.
Most recently, "The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington, D.C., and Suburban Boston Areas" empirical study found "substantial variation in the design and impacts" of inclusionary zoning programs across jurisdictions and across regions.
For example, in the San Francisco area the study "found no evidence that inclusionary zoning programs have increased the price or reduced the production of single-family homes, despite the fact that 93% of the programs are mandatory."
The study also found that "by contrast" in the suburban Boston area there is evidence inclusionary zoning programs "resulted in small decreases in production and slight increases in prices of single family homes."
The authors caution that these results show "the design of inclusionary zoning programs may matter considerably." More so, inclusionary zoning programs "that provide density bonuses or other effective cost offsets to developers" may be less likely to drive up the price or decrease the supply of market-rate homes.
Even in the San Francisco area, programs that offered density bonuses "also produced more affordable housing units." It suggests, the study found, "inclusionary zoning policies are most effective when they are part of a regulatory climate that is friendly to new development.
An earlier Cato Institute study indicated that increased efforts to tighten credit criteria and limited supplies of AH caused in part due to state policies restricting vacant land use most probably will keep house prices up. It suggested "regional growth management drives up the cost of housing."
According to "The Planning Tax" study by Cato senior fellow Randal O'Toole, local policies often impose on future homeowners planning taxes that in expensive areas like the San Francisco Bay Area can reach up to $700,000.
"Growth management planning - planning and zoning that seeks to promote the general welfare by controlling the development of all urban and rural land within a state or region - makes housing unaffordable by limiting the amount of vacant land that is readily accessible for new housing," Mr. O'Toole stated in his study.
Mr. O'Toole also stressed that positive examples do exist in the Atlanta, Dallas-Fort Worth and Houston regions, which have demonstrated "the key" is the existence of relatively unregulated private land in unincorporated areas near to the cities.
"Most expensive housing markets in the U.S. have plenty of private land that is physically suitable for development. It has just been closed to development," he said.
Commenting on the new findings on various effects of state regulations, Jeffrey Lubell, executive director of the Center for Housing Policy, the research affiliate of the Washington-based National Housing Conference that released the new study in cooperation with the New York University Furman Center for Real Estate and Urban Policy, said these policies "are not one size-fits-all," so they need "to be tailored closely to local circumstances."
He said: "Communities should work collaboratively with all stakeholders to ensure that inclusionary zoning programs provide effective cost offsets to developers and that complementary housing policies are adopted to address other aspects of the local affordable housing challenge. In particular, there is a need in many expensive housing markets to reduce regulatory barriers to new development to ensure the market can respond to increases in demand."
The new study dismisses findings from previous attempts to study inclusionary zoning policies on grounds of "methodological limitations" and what it considers serious exaggerations on the policies' negative impact. According to Furman Center researchers, the new study is more accurate because it employs "multi-variant regression analysis to control for other influences on the housing market."
Furman Center director Vicki Been said, "Our analysis refutes the 'sky-is-falling' cries from inclusionary zoning opponents. We find no evidence that inclusionary zoning programs have reduced housing production in the San Francisco area, and find evidence of only slight effects on production in the Boston area. However, we found that inclusionary zoning policies have produced only a modest number of affordable housing units, suggesting that inclusionary zoning by itself is not a panacea for a community's affordable housing challenges."
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