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Lauren Thomas's avatar

this is such a disaster in British cities. In London, 35% of units in new developments need to be 'affordable', and in my borough, islington, it's 50%. The combo of this + interest rates + the new second staircase rule mean that the number of new units added is shockingly low (~450 units in both 2021 and 2022 for a population of 216,000 -- that's equivalent to 16k new units in all of NYC, which is like half as much as it's getting).

Huey Kwik's avatar

What's the point of the egg chart?

John's avatar

What if the goal is socioeconomically diverse neighborhoods, not just more housing

sp6r=underrated's avatar

Normies are much more honest on housing than policymakers and pundits. Normies will openly say they don’t want housing supply increased due to the pressure it will put on parking or neighborhood traffic. Normies will openly say they don’t want more housing because they want higher property values and exclusive neighborhoods for their socio-economic class.

Most policymakers and pundits aren’t comfortable making this argument openly. Consequently they lie and pretend they oppose increasing housing supply for non-self-interested reasons.

This tendency is much more pronounced in left-of-center circles because opposing housing for self-interested, quality-of-life reasons causes immense cognitive dissonance. On some level this discrepancy reminds me of what you see among the right-wing and taxes.

Normie conservatives are very comfortable saying they want a tax cut for self-interested reasons. Many conservative policymakers and pundits aren’t comfortable being explicitly self-interested so they lie and pretend “tax cuts pay for themselves.”

Back to housing, inclusionary zoning may have started off as a well-meaning program. But now everyone knows the score. It doesn’t increase housing supply. It maintains popularity among left-of-center policymakers and pundits because it allows them to pretend, they are trying to increase the housing supply. The lie isn’t just for the public it is also for themselves. They don’t want to admit they prefer more expensive housing over less parking, more neighborhood traffic, lower property values and class integration because it goes against their self-perception.

This is why I prefer normie anti-housing advocates over professional anti-housing advocates. It is also why I prefer right-wing anti-housing advocates over left-wing, anti-housing advocates. They are much more likely to give it to you straight.

John Brady's avatar

What are your thoughts on NJ’s Mount Laurel doctrine? My understanding is that its primary mechanism is inclusionary zoning, and while NJ’s housing is far from affordable, it seems like the market would be far worse without it.

Longestaffe's avatar

About these buildings that are "required to have a minimum lot size of 5,000 square feet and for 20 percent of the units to be affordable" and the "proviso which says that if your building has ten or more units, then 20 percent of the units need to be set aside as affordable":

Do the people who decide these things ever define "affordable"? After all, there's no such thing as absolute affordability or its implied alternative, absolute unaffordability. Some people can afford great luxury. Others can't afford anything that's not practically free. Even replacing "affordable" with "cheap" wouldn't clear things up.

Roughly what size of housing budget should we be thinking of in the case of "affordable" units in Cambridge?

Ben's avatar

Portsmouth workforce housing incentive is a disincentive. Here's why.

Jeff McMenemy

Portsmouth Herald

A preliminary study by RKG Associates found Portsmouth's work-force housing incentives financially disincentivize developers.

Current policies make projects with work-force units less profitable than market-rate projects, even with density bonuses.

Consultants suggest applying work-force requirements only to bonus units, not the entire project, to improve incentives.

Another suggestion includes offering additional regulatory or financial benefits for developments utilizing bonus density.

Despite a housing boom, most new Portsmouth units are market-rate, with limited work-force housing development.

PORTSMOUTH — The city’s policies aimed at creating more workforce housing in Portsmouth aren’t working, according to a study.

The city’s housing consultants, RKG Associates, reached that conclusion and shared the study results during a public meeting July 10 in City Hall.

Kyle Talente, the president of RKG Associates, said the city’s existing “workforce housing policy basically says you have to provide us with a certain percentage of units, and in exchange, we’re going to give you some bonus densities."

Talente said developers get a lower financial return with Portsmouth's policy because the loss in rental revenue that comes with workforce units exceeds the financial gain of added units.

Portsmouth Housing Authority Executive Director Craig Welch at Ruth Lewin Griffin Place, a downtown workforce housing development in Portsmouth.

Talente added, "The bottom line is … your current policy does not provide an incentive to developers to provide workforce housing units, it provides a financial disincentive. All things being equal, if I’m a residential developer building a rental property, I’m not going to take advantage of your workforce housing policy because my return goes down even though I’m able to build more units."

What are affordable rents for workforce in Portsmouth?

Talente said in Portsmouth workforce units in rental housing projects are aimed at people who earn 60% of the area median income (AMI).

He said the maximum affordable rents at workforce rates are $1,355 monthly for a studio apartment, $1,444 for a one-bedroom unit, $1,632 for a two-bedroom unit and $1,819 for a three-bedroom unit, citing RKG’s chart.

He acknowledged “those rents are not reflective of what a traditional market rate rent would be” in Portsmouth.

Living at NH park and ride: Cars are home for many in Seacoast

When RKG looked at doing an ownership project with workforce units under the city’s existing incentives, they came to the same conclusion, Talente said.

When a proposed condo development includes workforce units, the “project performs worse financially,” he said.

Portsmouth advised to make changes

The study the consultants conducted “focused in on your zoning areas that allowed for higher intensity residential development,” Talente said.

“We took a look at the feasibility of your existing work-force housing policy, and we ran a financial model to understand whether or not the current policy creates the financial incentives necessary to encourage developers to take advantage of it,” he explained.

He also stressed that unlike other states including Massachusetts, New Hampshire does not allow communities to compel developers to include workforce units in a project.

The three main components a developer looks at before deciding whether to move forward are construction (including land cost and building the project), operating costs to run the project and expected revenue from rentals or sales, he said.

Talente described the 20% requirement for workforce units in some city zoning districts — required if developers want to receive a density bonus — as “extremely aggressive. ... Frankly, there needs to be adjustments."

The options the consultants suggested would result in “getting fewer workforce housing units (per project) so that we can accomplish the financial return that needs to be there," he said.

The first option he suggested was “applying the workforce housing requirement, the 20% or the 10%, depending on what district you’re in, to only the bonus units.”

That way for example, only 20% of the extra units would need to rent or sell at workforce rates, rather than 20% of all the units in the development, he said.

As an example, he pointed to the city’s new Gateway Neighborhood Overlay District (GNOD) off Commerce Way.

A developer seeking to build the maximum number of units would need to build 33 workforce units under the current zoning, and about seven if the regulations were changed, he said.

“Rather than creating a financial disincentive from a return perspective, you’re actually creating a slight incentive for an investor to use the bonus density and provide workforce housing units,” Talente said. “Simply put, it can work, it’s just not going to yield as many workforce housing units as if you require 20% across the whole project.”

Another option is to “provide regulatory benefits or financial incentives to developments that use bonus density,” the study concluded.

“If the policy were to provide a better return, I think the private market would take advantage of it,” Talente said.

Portsmouth developments have produced few workforce units

Sage Portsmouth, a new housing project seen here when it was under construction in 2024, includes 19 workforce units.

The conclusion by the city’s consultants likely does not come as a surprise to anyone who’s been closely watching Portsmouth development during the past decade. While housing development has boomed in the city, most units created by private developers now rent or have been sold at market rates, city planners and officials have acknowledged.

The biggest workforce development built is the Ruth Lewin Griffin housing development, a 64-unit work-force housing project by the Portsmouth Housing Authority.

There have been some developments approved or under construction that include work-force units.

The five-story, 95-unit condominium development that’s now located on the former Cinemagic movie theater site includes 19 workforce units. The condos, which are named Sage Portsmouth, are located off Route 1 near Water Country and the project was developed by Torrington Properties Inc.

Developer Mark McNabb received approval in 2024 for a redevelopment project located at the site of the former Jerry Lewis Cinemas.

The project will feature 72 apartments, including 15 that will rent at work-force rates.

The redevelopment project off Lafayette Road near Portsmouth High School will include two five-story additions with 36 apartments each.

The property is now home to two restaurants, including the Tour restaurant and indoor golf facility.

Eliza Rodriguez's avatar

This post matches my personal experience living in Seattle. I'll spell it out a bit:

Last year, I made around $44,000. This isn't much, but it's a little more than a person would make working a 40 hours a week in a minimum wage job in Seattle. The average cost to rent a one-bedroom apartment here is around $2,300, which would be 63% of my income if that's what I was paying.

Since 2017, Seattle has required new housing to offer between 5% - 11% affordable housing units. There is a complicated method for calculating how much.

I hunted for an affordable housing unit like a crazy person, and got one in one of those buildings Matt just described as, "full of one-bedroom apartments with a rooftop pool and a courtyard dog park". I pay around $1,500 a month for it when including parking, which, unlike the city of Seattle, I don't see as optional because the nearest unpaid street parking is across Highway 99. I used to pay $1,300 for a 270 sq ft microstudio so cramped that when I opened the refrigerator, it would hit the bed. So my new one-bedroom is way better, except that I can't do the same things as my friends in the building due to income limitations.

There are four apartment buildings in Seattle that offer affordable housing units priced for people making less than 50% of the median income, which is $100,000. My building is the largest of them and has seven of these units. When I called them, they said that this was the first time in almost a year that they had one available.

Guessing that the other three 50% median income apartments also have around seven of those units available means that there are up to 28 of these apartments in the city of Seattle, despite the law requiring all new housing to include affordable units.

My point is that the law didn't seem to do much. When I moved out of my microstudio, there were about three different people who worked at Trader Joes living there, and two from Whole Foods. One gal my age worked at a cupcake store downtown, one guy at Starbucks. There was also a vet, a personal trainer, and a phlebotomist. These were people we need in cities, and more often than not, all they can get working full time is a microstudio. There's just not enough housing.

tomtom50's avatar

I don't think "affordable housing" is an established term of art! I always understood it as housing that people below median income could afford.

It includes public housing. It includes Section 8. It includes low-end apartments made plentiful by building lots of units.

Yes, it also includes percentage set-asides leased below market as a condition of development, but I always was skeptical this increased affordable housing overall for the reasons MY gives.

It's a problem when clear words like "affordable housing" get jargonized. Let's keep that phrase in the YIMBY lexicon because it is what people, especially people with lower incomes, want. LOWER RENT.

purqupine's avatar

I was recently involved in a planning project for some underutilized public land as a real estate advisor, and the proponents of adding an IZ mandate were pretty explicit about how they didn't like the fact that there would be 'haves' in the new buildings and 'have nots' in the old buildings. We explained how IZ would affect project economics and would lead to the market rate units needing to be even more expensive to subsidize the affordable units, and how the public landowner wouldn't be maximizing land value (land sales were need to pay for new roads/infrastructure), but there was a very strong 'social leveling' impulse in the community. They just didn't like that the wealthy had nicer things, and thought they should be sharing with everybody.

As an aside, I am starting to think that a lot of left-wing urban politics is really about social leveling and relative status competition vs actually improving material outcomes for the vulnerable. Not sure what to do about that, but I think its worth exploring.

Helikitty's avatar

Social leveling is pretty important, at least for people who have more than I do and need to be taken down a notch

BD Anders's avatar

Matt writes that, like eggs, housing is "demand inelastic". Given that, I don't understand why increasing housing supply should lead to lower housing prices. Presumably builders and developers also understand that housing is demand inelastic, and they can charge what they want and people will have to pay it; why would more supply prompt them to lower prices?

Matthew Wiecek's avatar

Actually, inelastic demand means that higher supply should *dramatically* swing prices down.

Let's say there's demand for 100 widgets at any price. The cost to produce widgets is $1, but the current price is $2. A new supplier comes online and offers 10 widgets for $1.50. So the total available supply is now 110 widgets.

Now, 10 widgets *will* go unsold. And so the widget makers must make a choice. Cut prices, possibly even below cost and take, say, a 20% loss. Or fail to sell and take a 100% loss.

In the long run, this leads to brutal competition with exactly 100 widgets produced and sold close to at cost.

Scott L's avatar

Seattle solved this problem in our IZ policy. You see, as an alternative to adding the required affordable units, the Developer can make a (fairly substantial) contribution to the City's affordable housing fund. Most developers opt for this second option.

Requiring a "contribution" to the City in order to build housing...I'd like to see Yglesias argue that *this* is somehow a "tax on new construction"!

Helikitty's avatar

Interesting, I didn’t know this

Discourse Enjoyer's avatar

This is the type of post that I send to my very left-wing Seattle friends to try to get them slower and boringer when it comes to housing--but this one's paywalled! Just sayin'

unreliabletags's avatar

Inclusionary zoning seems less a revenue source and more an expression of values about what should happen under scarcity - that valuable resources should be distributed by social criteria instead of ability to pay.

Chris Elmendorf's avatar

Great post but I think you're underselling the sense in which IZ doubles as a hidden land-value tax--which makes the politics of unwinding it a lot harder. https://x.com/CSElmendorf/status/1944779858774741395

Chris Brandow's avatar

This is one more example of what seems to be so typical now of ways in which the left has tried to accomplish goals without acknowledging what they are actually doing.

This post really helps me see how we are obviously asking individual developers to pay for subsidize, housing, rather than just incurring the cost of housing subsidies.

It’s hard for me to articulate how this tendency on the left is different than just normal politics, but it seems to be pervasive. It’s a form of gaslighting and *feels* like it’s a common thread of what is annoying about democrats lately.