In lieu of preparing our own version of the Harlem Shake video last week, the Center for Housing Policy polished off a new report about inclusionary housing that I think you’ll find at least as enlightening. After the Downturn: New Challenges and Opportunities for Inclusionary Housing examines how well inclusionary housing policies weathered the historic housing downturn, and how the environment for inclusionary housing has changed since 2007.
By way of background, inclusionary housing policies require or encourage developers to include a modest share of new homes for low- or moderate-income households in otherwise market-rate developments. Often these policies function as mandatory zoning requirements but are accompanied by various forms of regulatory relief to help offset the costs for developers of pricing units more affordably.
Up through the recent housing boom, inclusionary housing policies enjoyed growing popularity, both as a mechanism for including affordable homes in opportunity-rich, high-demand neighborhoods, and as a tool that engages the private sector in creating needed affordable homes. But over the past five years, new challenges have emerged that affect the workability and effectiveness of many inclusionary housing policies. These include:
- New restrictions on applying inclusionary requirements to rental housing in several states;
- A shift in development patterns toward “infill” settings where developments costs are often higher; and
- Difficulties selling some affordable homes produced through inclusionary policies due to tightened mortgage credit, FHA concerns about affordability restrictions that survive foreclosure, and inclusionary home prices being set too closely to market prices in communities where the market has not yet rebounded.
After the Downturn discusses these and other key issues that have come into focus over the past five years, drawing on conversations I was able to have with practitioners, experts, and local administrative staff from across the country. The report also discusses some promising responses that may be relevant to local jurisdictions as the market begins to recover, while leaving a more extensive treatment of potential solutions to follow-up reports.
After the Downturn is the first in a series of research papers and policy briefs on inclusionary housing due out from the Center in 2013. We look forward to your feedback, and to sharing more research as the year unfolds.