The Colorado legislature is considering a bill to allow cities to require developers to provide “affordable housing” in their developments. This is called “inclusionary zoning.” Such requirements have three effects.
This five-story building is typical of the new housing being built in Denver. It has 871-square-foot one-bedroom apartments for rent for $2,400 to $3,600 a month. Someone would need an income of nearly $100,000 a year to afford one. Inclusionary zoning would make it even more expensive. Photo by Jeramey Jannene.
First, developers respond to the higher costs by building fewer units of housing. Second, to pay for the units they have to sell or rent at below-market rates, they raise prices on the market-rate units. Third, existing home sellers or landlords, seeing that new units are going for higher prices, raise their prices as well. Voila! Inclusionary zoning makes housing less affordable. But don’t believe me: here’s a paper that proves it using real-world data. Continue reading
