Inclusionary housing policies tie the creation of affordable homes for low- and moderate-income households to the construction of market-rate housing or commercial development. These policies leverage the profitability of new development to pay for new affordable housing units and support the creation more economically diverse and inclusive communities.
As housing prices rise, so does the value of land. Inclusionary policies seek to “capture” a portion of the increased land value for affordable housing by requiring incentivizing (or requiring) developers to include affordable units in developments that would otherwise be entirely market-rate. In its simplest form, an inclusionary housing program might require developers to sell or rent 10 to 30 percent of new residential units to lower-income residents.
Where does inclusionary housing work?
More than 900 jurisdictions across 25 states have inclusionary housing programs. Jurisdictions with inclusionary housing programs are most common in New Jersey (45%), Massachusetts (27%), and California (17%), where state laws incentivize or require localities to create a definable share of affordable housing.
Grounded Solutions Network maintains inclusionaryhousing.org, a website dedicated to helping communities design, maintain and learn about the impact of inclusionary policy. Our resources include an inclusionary housing map where you can explore the prevalence across the nation and an inclusionary housing calculator that you can use to model the financial impacts of various policy components on different development prototypes.
Inclusionary housing can’t solve the housing crisis alone, but it is a proven strategy for cities and states to create, maintain, and preserve housing units that are affordable for generations.