In the June 3 edition of the Daily Journal, the letter to the editor from Stephanie Reyes (“Inclusionary housing is necessary”) claims that “basic common sense” reveals problems with the claims I made in my May 28 guest perspective (“SB 50’s pause will only embolden housing activists”) regarding “inclusionary housing” actually resulting in higher housing prices.
Instead of citing “basic common sense,” I will cite actual academic studies about the negative effects of “inclusionary housing,” which is really just a nice name for rent control.
A 2009 study published by the U.S. Department of Housing and Urban Development and other leading institutions found that inclusionary housing policies caused prices to increase 3% faster in jurisdictions with such policies relative to those that didn’t have them. The papers conclusion noted that the “results are fully consistent with economic theory and demonstrate that inclusionary zoning policies do not come without costs.”
Additionally, in 2015, a separate study by Tom Means of San Jose State University found that “cities imposing below-market housing mandates end up with 20 percent higher prices and 7% fewer homes overall.”
Empirical evidence suggests that inclusionary housing policies do indeed increase prices while reducing supply, contrary to “common sense.”
I believe that most people who push for these policies have good intentions. However, we cannot ignore the very real detrimental effects that these policies have on everyone, including the very people it claims to help.