Housing Market Effects of Inclusionary Zoning

20 Pages Posted: 21 Nov 2009 Last revised: 2 Apr 2010

Antonio M. Bento

Cornell University - Dyson School of Applied Economics and Management

Scott Lowe

affiliation not provided to SSRN

Gerrit Knaap

University of Maryland

Arnab Chakraborty

University of Illinois at Urbana-Champaign

Date Written: July 15, 2009

Abstract

This article presents an empirical analysis of the effects of inclusionary zoning policies on housing prices and starts in California during the period from 1988 through 2005. The analysis compares cities with and without such policies and isolates the effects of inclusionary zoning programs by carefully controlling for spatial and temporal conditions, such as the neighborhood or school district within which the house is located and changing market conditions over time. The analysis found that inclusionary zoning policies had measurable effects on housing markets in jurisdictions that adopt them; specifically, the price of single-family houses increases and the size of single-family houses decreases. The analysis also found that, although the cities with such programs did not experience a significant reduction in the rate of single-family housing starts, they did experience a marginally significant increase in multifamily housing starts. The magnitude of this shift varied with the stringency of the inclusionary requirements. Finally, the analysis found that the size of market-rate houses in cities that adopted inclusionary zoning increased more slowly than in cities without such programs. The results are fully consistent with economic theory and demonstrate that inclusionary zoning policies do not come without costs.

Keywords: Cityscape, HUD, HUD USER, Affordable Housing, Inclusionary Zoning

Suggested Citation

Bento, Antonio M. and Lowe, Scott and Knaap, Gerrit and Chakraborty, Arnab, Housing Market Effects of Inclusionary Zoning (July 15, 2009). Cityscape: A Journal of Policy Development and Research, Vol. 11, No. 2, p. 7, 2009. Available at SSRN: https://ssrn.com/abstract=1509602

Antonio M. Bento (Contact Author)

Cornell University - Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

Scott Lowe

affiliation not provided to SSRN ( email )

Gerrit Knaap

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Arnab Chakraborty

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

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