No one policy or program alone will meet a community’s affordable housing needs. While inclusionary housing is only one tool in the toolbox, it’s an important one. Most inclusionary housing programs require homes to remain affordable for at least 30 years, meaning that even if the program produces a relatively small number of units each year, the total stock of affordable homes grows over time.
Over 100,000— Affordable units produced by a subset of 258 inclusionary housing programs across the nation.*
$1.76 billion— fees collected by a subset of 123 inclusionary housing programs across the nation for affordable housing purposes. *
426— Average affordable units produced by a subset of 258 inclusionary housing programs across the nation. *
7%— The neighborhood (census block group) poverty rate of a typical inclusionary housing unit is significantly lower than the poverty rate (16%) in neighborhoods without inclusionary housing units within the same jurisdictions. Inclusionary units are in low-poverty neighborhoods and the same study suggests that inclusionary units are in areas assigned to higher-performing schools than those without inclusionary units. *
The way you design your program can make a difference in how many units it produces. The most productive programs share certain features: they are mandatory, offer incentives, allow developers flexibility with multiple options for compliance, and require long-term affordability.
Inclusionary housing can be an important source of units over time. Brown* found that inclusionary housing accounted for half of Montgomery County’s affordable housing production, and Mukhija and colleagues* found that inclusionary programs in Southern California were producing about as many units annually as the Low Income Housing Tax Credit (LIHTC)program – the country’s largest housing subsidy program – was creating.
Units produced isn’t the only measure of impact for inclusionary housing programs. Communities must also attend to how well their inclusionary housing programs advance racial equity.
An economic feasibility study conducted by a qualified real estate economist can provide local policymakers with a clearer sense of how inclusionary housing requirements will impact the profitability of local development projects and the price that developers can pay for developable land. The economist will research local prices and rents as well as the key factors driving the cost of building. The economist will use this information to assess whether or not proposed affordable housing requirements would make typical projects infeasible. Any kind of feasibility study is necessarily somewhat imperfect, but the goal is to give policymakers a general sense of the likely impact of proposed housing requirements and incentives on land prices and development profits. Ultimately, a detailed feasibility study is the only way to address legitimate concerns about whether affordable housing requirements could do more harm than good.
Read more about conducting an economic feasibility analysis here.
No: Rents and home prices are set by a market. When a city imposes inclusionary housing requirements, it may increase a developer’s costs. But developers can’t really pass those costs onto home buyers or tenants because new units must still be competitively priced in the overall market. Instead, over time, land prices will fall to absorb the cost of the inclusionary housing requirements. Any incentives offered by a community would reduce the degree of land price reductions. Both theoretical and empirical economic research supports the conclusion that in the short term the costs associated with affordable housing requirements are born by developers and in the longer run they are passed on to land owners.
Probably Not: Inclusionary housing is only ever one among several tools that cities deploy to address the dire need for more affordable housing and the full set of policies is not enough to meet the full need in most cities. But that is no reason not to do all that we can. Denver City Council member Robin Kniech says “no one ever says we shouldn’t pave the roads just because we can’t fill every pothole.”
While inclusionary housing is only one tool in the toolbox, it’s an important one. Nationwide, 258 inclusionary housing programs reported creating about 110,000 affordable homes. Also, 123 programs, some of which overlap with the 258 programs reporting units, reported collecting $1.76 billion in fees to use for affordable housing.
The way you design your program can make a difference in how many units it produces. While the average production rate across all programs is 27 units per year, excluding programs that have produced zero units, average production rate for the country’s top 20 programs is 235 units per year—almost 10 times greater (Wang and Balachandran, 2021). The most productive programs share certain features: they are mandatory, offer incentives, allow developers flexibility with multiple options for compliance, and require long-term affordability.
How prevalent are inclusionary housing programs in the United States? What are the program design patterns? And what is the scale of production for these programs? Building on our earlier work, Grounded Solutions Network embarked on a large-scale data collection effort between 2018 and 2019 to study inclusionary housing programs in local jurisdictions. The study yielded this report.
Read the Report
How can inclusionary housing programs best incorporate racial equity? These two reports focus on two important elements intended to engage both the process and outcome of racial equity: Advancing racial equity through anti-racist methodologies that engage in transformative change, and advancing racial equity through specific technical elements of inclusionary housing policies, programs and practices.
Read the Reports
This report examines inclusionary policies all over the state of California and looks at their effectiveness, what kinds of homes were produced, who lived in these homes, and the overall impact on the city or county. View Report
This report examines 11 inclusionary programs across the United States to determine the extent to which the policies serve lower-income families and provide inclusionary residents with access to low-poverty neighborhoods. They also evaluate whether inclusionary programs offer lower-income children opportunities to access high-performing schools. View Report
