How (Not)To Create Affordable Housing

Using price controls is certainly not the way to create affordable housing. Liberals in California are strong defenders of inclusionary zoning and claim that it will lead to more affordable housing, especially for the poor.

Evidence suggest the exact opposite occurs. Because of inclusionary zoning you have less affordable housing for all and wind up hurting the poor the most.

Edward Stringham, and Benjamin Powell, professors of Economics at San Jose State University write,

Inclusionary zoning also fails to produce significant numbers of affordable units. In the entire Bay Area over 30 years, inclusionary zoning has led to only 6,836 below market units. The decrease in housing production due to inclusionary zoning far outweighs the “increase” in price controlled homes. The average city has produced fewer than 15 affordable units per year since passing an inclusionary ordinance. Comparing inclusionary zoning’s output to the Association of Bay Area Governments’ projected affordable housing need, makes the failure of inclusionary zoning unambiguous. 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.

This is example number 8,948,564 where you have someone with good intentions make something worse because of a belief that the government can solve the problem better than the ‘free market’. Both price controls and government interference have a long history of making matters worse, especially for the poor.

HatTip: EconLog.

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