Inclusionary housing policies have been adopted in more states and places than commonly thought. A nationwide scan identified 1,379 inclusionary housing programs in 791 local jurisdictions:*
- Programs were found in 25 states and the District of Columbia.
- Of the 507 programs, 45 percent were located in New Jersey and 27 percent were located in Massachusetts.
- Approximately 83 percent of identified programs were mandatory and 17 percent were voluntary.
Inclusionary programs are found predominantly in New Jersey, California, and Massachusetts, where state laws incentivize or require localities to create a definable share of affordable housing. But a surprising number of mandatory and voluntary inclusionary housing policies are now found in other areas of the country, including the Midwest, Southeast, Rocky Mountain West, and every coastal state besides South Carolina.
Inclusionary housing has also established a critical mass in states such as New York, Colorado, Rhode Island, and North Carolina, where inclusionary housing policies can be found now in 10 or more localities. Voluntary inclusionary housing policies have been introduced in states such as Minnesota, Georgia, and Tennessee, where it had been difficult to generate political will for mandatory programs.
Inclusionary Housing Programs by State
Source: Thaden and Wang (2017) *
Inclusionary Housing Program Locations
Probably not: Inclusionary housing relies on market growth to produce new affordable housing resources; it is not likely to be successful in communities that are not experiencing or anticipating growth. But inclusionary may not make sense for every growing community.
Smaller communities, in particular, sometimes lack the capacity to effectively administer inclusionary programs. Outsourcing and multi-jurisdiction collaborations could make smaller programs easier to administer by bringing together units from many local programs. But communities that produce very few units may find that the burden of administration outweighs the benefits of an inclusionary housing program.
Inclusionary housing may not be suitable in every type of housing market, but it can work in more places than many people realize. Inclusionary programs are tools for sharing the benefits of rising real estate values and, as a result, they are generally found in communities where prices are actually rising. In many parts of the United States, land prices are already very low, and rents and sales prices often would be too low to support affordable housing requirements even if the land were free. In these environments, policies that impose net costs on developers are unlikely to succeed (though some communities nonetheless require affordable housing in exchange for public subsidies).
The communities where rising housing prices are a real and growing problem are quite diverse and plenty, and are not high-growth central cities like Seattle. In California, one third of inclusionary programs are located in small towns or rural areas. Wiener and Bandy* studied these smaller-town inclusionary programs and found that many were motivated by the influx of commuters or second homebuyers entering previously isolated housing markets. They described what happened when developers began building high-end homes for commuters in Ripon, California. As Ripon very quickly became one of the San Joaquin Valley’s most expensive communities, local residents became increasingly concerned about housing costs. Ripon’s leaders set a goal that 10 percent of all new housing would be affordable. As Wiener and Bandy* describe:
The willingness of small jurisdictions, especially small cities, to overcome local politics and take bold and decisive action to adopt inclusionary housing programs is often a derivative of scale. People know their neighbors. They directly feel the shortage of affordable housing. They know where the few remaining parcels of developable land are located. They know that the character of their communities is changing. And, they have access to their elected officials who work in the same work places, shop in the same stores, and send their kids to the same schools.
While inclusionary policies are clearly relevant in a very wide range of communities, the appropriate requirements can be very different from one market to another. In communities where higher density development is not practical, higher affordable housing requirements may not always be feasible but lower requirements may nonetheless be effective. San Clemente, California requires only 4 percent of new units to be affordable, but produced more than 600 affordable homes between 1999 and 2006.* Wiener and Bandy* also found that many smaller jurisdictions relied heavily on in-lieu fees and some set fees at very modest levels.
Smaller communities with inclusionary housing programs must address unique considerations, such as limited staff capacity and costs of administration. Outsourcing and multi-jurisdiction collaborations can make smaller programs easier to implement, but there are some localities where the benefits of an inclusionary housing policy will not adequately offset its costs.