Ruoniu (Vince) Wang, Wei Kang, Xinyu Fu, Do inclusionary zoning policies affect local housing markets? An empirical study in the United States, Cities, Volume 158, 2025, 105736, ISSN 0264-2751, https://doi.org/10.1016/j.cities.2025.105736.
Abstract
In the face of a housing affordability crisis, many cities have adopted inclusionary zoning (IZ) policies to increase the supply of affordable housing. Yet, IZ remains a controversial local policy due to its varied and inconclusive effects on housing market outcomes. This study investigates this debate by adopting a quasi-experimental design with a national dataset of IZ policies in the United States. We find that, on average, IZ policies did not affect municipality-wide housing permits or rents. However, the implementation of IZ resulted in an average of 2.1 % increase in home prices. Our results also underscore the connection between IZ policy design and market outcomes: more stringent IZ policies (i.e., those that are mandatory and apply to the entire jurisdiction) led to a higher impact on home prices while mitigating the rent effect. Additionally, IZ's market effects varied based on market conditions and the time elapsed since policy adoption. We discuss these findings in terms of implications for policy design and planning practice.
Keywords
Inclusionary zoning; Housing market outcome; Policy effect; United States; Staggered Difference-in-Differences